[iCimiHtsnUiH.'iitiHfmi! 


'^linWSOl^^         v/.9i)3AINnwv 


'^c/Aav«HnA>^' 


'C/AHVJI 


,    CO 

■■■■■^  J" 


^lUBRARYO? 


^IUBRARY(?/ 


Cntf^  j.OFCAUF0%      ^OFCAllFOff^ 


>&Aava8niJ^ 


.^WEUNIVERJ/A 


%OJnVDJO=^      '^tfOJIWDJO'^        ^J:ifl]DKVSO\^ 


.^EUNIVER% 


^TiUONVMll^ 


^\WEIJNIV!R%. 


^lOSANCEUf^ 


iWEUNIVERS/A 


^lOSANCEl^^ 
o 


'^rju'wv.w^ 


■V/OHAIMn.lUM^ 


-s^lUBR 

u7 


^i^nDNvsoi'^     "^/yaaAWii-jftV^      '^.^ojnvjjo^ 


AOFCAllF0«t> 


^OFCAl 


^ 


^iUBRARYO^      ^UIBRARYQ^ 


^OFCAilF0%       ^OFCAUFORij^ 


'^>&Ajiva8ni'<^     ^AMvaani^ 


^\WEIINIVER% 


.5.WEUNIVER% 


"^UDWSOl^ 


iVlOSAI 


"^/SaJAII 


"^/SMMI 


.5J(\EUNIVERS"/A       avIOSANCEI^         ^t-UBRARYO^        v^illBR 


'^i'ii33Mvsoi=<^     ^aaAiNaiwv** 


05,  >— ' »    ^  c? 


5-> 


^(?AHvaan'#    "^^^Anvjiaiii^ 


i3  i    <r-^  ^ 


^<»0JI]V0JO'^ 


^OFCAllFORjA       ^OFCAlIFOff^ 


%Aaviiaii-^^ 


:5  >— '»    I-  £? 

Jt?Aava8ii# 


-   _  ^  o 


,^WE•UNIVER% 


^iosAi«:fii^>. 
3 


3 

■^/Sa3AINn-3WV^ 


o 


%a3MNn3WV 


AWEUNIVERJ/a 


^TilJONVSOl'^ 


^lOSANCElf/^ 
o  ^ 


■V/5a3/MN(13WV* 


-^vMllBRARYOc.       ^lUBRARYQr 

.H       ^  d     jm^      ■dr.  iV?       yt  J    yMM'      i< 


^^OJIIVJJO'^       ^^OJIIVJJO'^ 


\WEUNIVERSyA 


%i3nw?;ni^ 


^lOSANCflfj;> 

o 


-< 


AOFCAllFOftk,       .^;OFCA11FO%, 


^sMUBRARY6k 


%OJI1V3JO^ 


4^1UBRARYQa 
§  1   ir-^  ^ 


'%OJI1V3JO>' 


.^WEUNIVERS/A 


o 
"^J^13DNVSm=^ 


^lOSANCElfj^ 

o 


%a3AINf)-3WV 


^^OFCAIIFO/?^^ 


^•OFCAIIFOR^ 


\WEUUIVER5/A 


^lOSANCElfj^ 
o 


'  >&Aavaaii# 


^^Aavaaiiii^       <rii30Kvsoi^      "^/sasAiNn-sftv 


TRUSTS  AND 


THE    PUBLIC 


BY 


GEORGE  GUNTON 

M 

AUTHOR   OF   "  WEALTH   AND   PROGRESS,"   "  PRINCIPLES   OF 
SOCIAL    ECONOMICS,"  ETC. 


NEW   YORK 

D.  APPLETON  AND  COMPANY 
1899 


Copyright,  1899, 
BY  GEORGE  GUNTON. 


N 


to 
2 


PREFACE 

This  volume  is  not  a  treatise  on  trusts,  but  a  collec- 
tion of  articles  and  addresses  previously  published, 
discussing  the  different  aspects  of  the  subject  as  they 
have  arisen  during  the  last  twelve  years.  The  first 
one  appeared  in  1887  as  a  series  of  editorials  in  the 
E"ew  York  Commercial  Bulletin,  now  the  Journal  of 
Commerce  and  Commercial  Bulletin,  and  was  published 
in  revised  form  in  the  Political  Science  Quarterly, 
cv  issued  by  Columbia  University,  for  September,  1888. 
g  This  was  really  about  the  first  attempt  seriously  to 
discuss  the  trust  question  in  its  economic  and  social 
aspects.  It  was  followed  in  the  next  issue  of  the 
o  Quarterly  by  an  exhaustive  article  on  the  legal  aspects 
5  of  trusts,  by  Judge  Theodore  "W".  D  wight,  then  the 
§  head  of  the  Columbia  Law  School.  From  that  time  on 
^  the  subject  has  grown  and  attracted  more  and  more  of 
\  public  attention,  until  it  has  now  become  an  absorb- 
ing topic  of  public  discussion. 

During  this  period  I  have  also  discussed  the  subject 
in  the  Social  Economist,  its  successor  Gunton''s  Maga- 
zine, the  New  York  Independent,  and  in  various  public 
addresses.  The  editions  of  the  periodicals  containing 
these  essays  and  addresses  have  in  many  instances 
been  exhausted,  so  that  several  of  them  are  now  out 
of  print.  The  demand  for  these  has  become  so  urgent 
that  it  has  been  deemed   advisable    to  republish   a 

iii 

432935 


IV  PREFACE 

number  of  them,  covering  the  chief  points  of  the  con- 
troversy, in  a  single  volume.  Of  the  seventeen  articles 
here  reprinted,  two,  "  Trusts  versus  the  Town  "  and 
"  Powers  and  Perils  of  the  Kew  Trusts,"  are  by  Mr. 
Hayes  Robbins,  associate  editor  of  Gu?ito7i's  Magazine. 

All  the  articles  and  addresses  appeared  at  different 
times ;  they  are  really  separate  papers,  and,  while 
they  respectively  discussed  the  different  phases  of  the 
subject  as  they  arose  in  public  controversy,  they  not 
infrequently  cover  the  same  points ;  so  that,  when 
brought  together  in  this  way,  there  is  some  repetition. 
But  this  was  unavoidable  without  re-writing  the  whole 
matter  and  making  the  book  into  a  logically  connected 
treatise,  which  is  exactly  what  it  is  not  intended  to 
be.  In  view  of  this  fact  it  was  deemed  advisable  not 
to  revise  them  and  bring  the  data  down  to  date,  but 
to  publish  each  essay  as  it  appeared  and  add  footnotes 
referring  to  the  chapters  where  more  recent  facts  are 
presented,  thus  permitting  the  articles  to  retain  their 
chronological  appropriateness.  While  from  a  literary 
point  of  view  the  repetition  of  facts  and  arguments  is 
a  defect,  it  may  possibly  have  the  merit  of  serving  to 
emphasize  some  of  the  more  important  points  in  the 
controversy. 

About  every  phase  of  the  trust  question  is  discussed 
in  these  essays,  and,  while  in  the  main  the  principle  of 
trusts  as  an  economic  development  is  defended,  the 
abuses  of  the  trust  principle  are  pointed  out  and  criti- 
cised with  equal  frankness. 

In  many  chapters  reference  is  made  to  the  Stand- 
ard Oil  Company,  for  the  reason  that  this  corporation 
has  constantly  been  under  fire.  Nearly  all  the  oppo- 
sition  to   trusts   is  fortified  by  charges  against  that 


PREFACE  V 

concern.  It  has  been  the  subject  of  legislation  in 
several  states  and  of  high-handed  attempts  at  whole- 
sale blackmail,  as  well  as  special  pleadings  before 
the  Interstate  Commerce  Commission  and  various  in- 
vestigating commissions  of  congress  and  the  different 
states.  Its  affairs  have  been  conspicuous  in  all  the 
literature  of  the  subject,  and  therefore  necessarily  come 
up  for  frequent  discussion. 

While  this  little  book  has  the  disadvantages  neces- 
sarily connected  with  collections  of  separate  essays  on 
the  same  subject,  it  is  hoped  that  its  existence  will  be 
justified  by  the  amount  of  important  data  it  presents, 
not  elsewhere  published  in  convenient  form. 

New  York,  October,  1899. 


CONTENTS 


CHAPTER  PAGE 

I.  The  Economic  and  Social  Aspects  of  Trusts 1 

II.  The  Economic  Errors  of  Trusts 32 

III.  Integrity  of  Economic  Literature 44 

IV.  Are  Luxuries  Wasted  Wealth 61 

V.  Large  Aggregations  of  Capital 72 

VI.  Facts  from  the  Oil  Regions 81 

VII.  Trusts  versus  the  Tovsai , 89 

VIII.  The  State's  Eelation  to  Capital 99 

IX.  The  State's  Relation  to  Labor 119 

X.  The  Era  of  Trusts 140 

XL  Machinery  and  Labor  Displacement 145 

XIL  The  Tin,  Plate  Trust 174 

XIII.  The  Tether  of  Large  Fortunes 180 

XIV.  Powers  and  Perils  of  the  New  Trusts .  189  ' 

XV.  The  Tariff  and  Trusts 205 

XVI.  Crusade  against  Prosperity 213 

XVII.  From  the  Public  Point  of  View 326' 


I. 

THE  ECONOMIC  AND  SOCIAL  ASPECTS  OF 
TEUSTS  * 

"  What  shall  we  do  with  trusts  ?  "  has  of  late  become 
an  absorbing  theme  of  public  discussion.  Indeed,  the 
public  mind  has  begun  to  assume  a  state  of  apprehen- 
sion, almost  amounting  to  alarm,  regarding  the  evil 
economic  and  social  tendencies  of  these  organizations. 
Nor  is  this  apprehension  limited  to  professional  agita- 
tors and  chronic  alarmists.  It  is  shared  in  by  all  classes. 
Our  foremost  journalists,  essayists,  orators  and  publi- 
cists unite  in  warning  us  against  the  evil  consequences 
to  be  expected  from  the  organization  of  trusts,  syn- 
dicates and  the  like.  In  fact,  the  social  atmosphere 
seems  to  be  surcharged  with  an  indefinite  and  almost 
inexpressible  fear  of  trusts. 

In  the  present  state  of  the  public  mind  upon  the  sub- 
ject, to  raise  a  hand  against  trusts  is,  a  priori^  a  right- 
eous act.  It  practically  constitutes  a  standing  invita- 
tion to  politicians, — who,  though  unfamiliar  with  eco- 
nomic principles,  are  very  sensitive  to  public  favors, — 
to  enact  all  sorts  of  arbitrary  laws  restricting  industrial 
enterprise,  on  the  principle  that  to  injure  a  trust  is  to 

*  Published  in  the  Political  Science  Quarterly  of  September 
1888. 

I 


2  TRUSTS   AND   THE   PUBLIC 

perform  a  public  service.  To  such  an  extent  is  this 
true  that,  in  one  form  or  another,  the  proposition  to 
limit  these  organizations  by  law  has  been  discussed  in 
both  national  and.  state  legislatures.  Commissions  of 
investigation  have  been  appointed  and  in  some  instances 
restrictive  legislation  has  already  been  adopted.  In 
obedience  to  this  feeling,  one  of  the  great  political  par- 
ties has  actually  made  opposition  to  trusts  a  national 
issue.  The  interests  of  industrial  and  social  freedom 
demand  that  a  truce  be  called  ;  at  least,  until  we  ascer- 
tain whether  we  are  really  engaging  a  public  enemy  or 
simply  pursuing  an  industrial  phantom.  In  order  to 
do  this,  it  is  necessary  carefully  to  consider  what  the 
economic  and  social  aspects  of  trusts  are. 

At  the  outset,  it  is  important  clearly  to  distinguish 
between  the  economic  character  of  the  organizations 
and  the  personal  character  of  the  individuals  conduct- 
ing them,  because  the  evils  arising  from  the  one  require 
an  entirely  different  kind  of  treatment  from  that  ap- 
plied to  those  caused  by  the  other.  If  a  grocer  gives 
light  weight,  if  he  puts  sand  in  his  sugar,  or  peas  in  his 
coffee,  or  if  a  merchant  sells  mixed  goods  for  all  wool, 
— that  would  hardly  be  a  justification  for  suppressing 
grocery  stores  and  dry  goods  houses.  In  considering 
the  economic  and  social  aspects  of  trusts,  we  are  not 
concerned  with  the  personal  character  of  Jay  Gould,  or 
the  president  of  the  Standard  Oil  trust,  or  any  man- 
ager of  great  railroad  syndicates,  but  only  w^ith  the  nec- 
essary economic  and  social  tendency  of  the  enterprises 
over  which  they  preside. 

The  first  step  in  the  inquiry  is  to  ascertain  what  con- 
stitutes the  distinguishing  economic  characteristic  of 
trusts.     In  what,  for  instance,  do  they  differ,  as  Indus- 


THE  ECONOMIC  AND  SOCIAL  ASPECTS  OF  TRUSTS.      3 

trial  institutions,  from  corporations,  individual  capital- 
ists, or  even  from  hand  workers  ?  The  more  closely 
we  examine  the  subject  the  more  clearly  we  shall  see 
that  they  are  all  fundamentally  the  same  ;  that  the  dif- 
ference is  not  one  of  principle,  but  solely  of  size  and 
complexity  of  industrial  organization.  The  hand  laborer 
organizes  industry  on  a  very  simple  basis,  and  on  a  small 
scale.  His  own  personal  energy  and  a  few  primitive 
tools  are  the  only  means  he  is  capable  of  employing. 
The  individual  capitalist  or  entreprenexLV  differs  from 
the  hand  laborer  in  that  he  organizes  industry  on  a  more 
complex  basis,  and  on  a  larger  scale.  Instead  of  being 
confined  to  his  own  personal  energy  and  such  tools  as 
he  himself  is  capable  of  using,  he  employs  a  number  of 
individuals  together,  divides  and  specializes  their  labor, 
and  uses  it  in  conjunction  with  steam-driven  machinery. 
The  corporation  differs  from  the  individual  capitalist  in 
that  it  consists  of  the  association  of  a  number  of  cap- 
italists, who,  by  a  greater  concentration  of  capital,  are 
enabled  to  organize  industry  on  a  still  more  complex 
and  extensive  basis.  And  similarly,  trusts,  w^hich  are 
the  latest  form  of  industrial  phenomena,  differ  from 
the  corporation  in  that,  instead  of  being  composed  of 
individual  capitalists,  they  comprise  corporations, 
which,  through  a  still  greater  concentration  of  capital, 
make  a  more  minute  differentiation  and  a  higher  inte- 
gration of  industrial  energy  possible.  The  economic 
difference  between  the  trust  and  the  corporation,  and 
that  between  the  corporation  and  the  individual  capital- 
ist, is  not  that  one  is  an  aggregation  of  corporations, 
another  of  individuals,  and  the  third  a  single  individual ; 
but,  like  the  difference  between  the  hand  laborer  and 
the  individual  capitalist,  it  consists  entirely  in  the  fact 


4  TRUSTS  AND   THE  PUBLIC 

that  one  represents  a  greater  aggregation  and  concen- 
tration of  capital  than  the  other. 

Manifestly,  then,  the  distinguishing  economic  char- 
acteristic of  trusts  consists  of  the  maximum  concentra- 
tion of  capital  in  productive  industry.  Therefore  the 
real  question  involved  in  considering  the  economic 
and  social  aspects  of  trusts  is :  Does  the  concentration 
of  capital  in  productive  enterprise,  whether  under 
trusts,  syndicates,  or  otherwise,  necessarily  involve 
economic  or  social  disadvantage  to  the  community? 
The  popular  answer  to  this  question  is  an  emphatic, 
yes !  Among  the  numerous  charges  upon  which  trusts 
and  kindred  organizations  are  indicted  as  public  evils 
are  the  following : 

(1)  That  they  tend  to  build  up  monopolies  and  drive 
small  capitalists  out  of  business ; 

(2)  That  they  destroy  competition,  the  great  mini- 
mizer  of  profits  and  equalizer  of  prices ; 

(3)  That  they  amass  fortunes  at  the  expense  of  the 
community  by  increasing  the  price  of  commodities; 

(4)  That  they  tend  to  build  up  an  oligarchy  which 
controls  legislation  in  its  own  interest  against  that  of 
the  community,  thereby  undermining  personal  and 
political  freedom,  and  endangering  the  existence  of 
democratic  institutions. 

If  these  are  the  necessary  results  of  trusts,  it  is  clearly 
the  duty  of  the  public  to  check  their  development. 
Before  taking  any  steps  in  that  direction,  however,  it 
is  highly  important  to  ascertain  whether  these  charges 
are  true,  and,  if  true,  whether  they  are  the  inevitable 
result  of  such  organizations. 

First :  Is  it  true  that  the  concentration  of  capital 
tends  to  build  up  monopolies  ?     Much  here  depends 


THE  ECONOMIC  AND  SOCIAL  ASPECTS  OF  TRUSTS      5 

upon  what  is  understood  by  the  term  monopol}'.  If 
by  monopoly  is  meant  merely  the  exclusive  power  to 
produce  a  commodity,  this  exclusive  power  may  be 
either  an  evil  or  a  great  benefit,  depending  entirely 
upon  the  way  it  is  obtained.  If  it  is  procured  through 
the  arbitrary  exclusion  of  competitors,  it  will  surely 
be  an  evil ;  but  if  derived  from  the  capacity  to  make 
the  article  more  cheaply  than  others,  through  the  use 
of  large  capital  and  superior  methods,  then  it  is  a 
positive  advantage  to  the  community.  It  is  true  that 
every  such  advantage  is  gained  by  underselling  com- 
petitors and  driving  small  capitalists  from  the  market ; 
but  that,  too,  is  an  economic  advantage.  To  under- 
stand this  it  is  necessary  to  remember  that  there  are 
two  kinds  of  wealth,  consumable  wealth  and  produc- 
tive wealth  or  capital.  The  former  is  wholly  devoted 
to  the  direct  gratification  of  personal  and  social  wants, 
while  the  latter  serves  no  other  purpose  than  that  of 
aiding  in  the  production  of  more  wealth.  The  sole 
function  of  capital  is  that  of  a  tool.  As  tools  are  of  no 
advantage  either  to  their  owners  or  to  the  public  ex- 
cept as  they  are  successfully  used  in  producing  wealth, 
it  follows  that  the  only  economic  and  social  interest  the 
community  can  possibly  have  in  either  the  diffusion  or 
concentration  of  capital  (tools)  is  that  it  shall  be  so  em- 
ployed as  to  produce  consumable  wealth  most  cheaply. 
The  income  of  the  capitalist  class  consists  of  profits, 
which  the  community  is  not  interested  either  in  sus- 
taining or  increasing.  On  the  contrary,  it  is  always 
interested  in  minimizing  the  proportion  of  the  product 
which  goes  to  the  capitalist  as  profits,  and  maximizing 
that  which  goes  to  the  community  in  low  prices  and 
high  wages.     Clearly,  therefore,  society  can  have  no 


6  TRUSTS  AND   THE  PUBLIC 

interest  in  sustaining  the  small  capitalist  unless  he  can 
produce  wealth  as  cheaply  as  the  large  one ;  any  more 
than  a  manufacturer  has  in  sustaining  a  lazy,  incom- 
petent workman  in  preference  to  an  efficient  one.  The 
public  could  better  afford  to  pension  small  manufac- 
turers as  paupers  than  to  pay  the  high  prices  resulting 
inevitably  from  the  inferior  methods  their  limited 
capital  can  employ.  Nor  is  this  necessarily  a  disad- 
vantage to  the  discharged  capitalist,  because  the  large, 
and  hence  successful,  capitalist  can  give  him  employ- 
ment as  a  manager  or  overseer  at  a  higher  salary  than, 
he  could  obtain  as  an  isolated  small  manufacturer ;  and 
this  is  what  has  occurred  wherever  industrial  integra- 
tion has  taken  place  on  any  considerable  scale.  Strictly 
speaking,  the  concentration  of  capital  does  not  drive 
small  capitalists  out  of  business,  but  simply  integrates 
them  into  a  larger  and  more  complex  system  of  pro- 
duction, in  which  they  are  enabled  to  produce  wealth 
more  cheaply  for  the  community  and  obtain  a  larger 
income  for  themselves.  Consequently,  the  economic 
absorption  of  small  capitalists  by  large  ones,  instead  of 
being  a  public  evil,  is  a  public  advantage,  because  it 
can  only  take  place  when  it  serves  the  community 
better. 

Second :  The  next  charge  is  that  the  concentration  of 
caj)ital  tends  to  destroy  competition.  This  is  a  serious 
mistake.  When  the  products  of  the  small  factory 
undersold  those  of  the  hand-loom  and  drove  the  hand- 
loom  weaver  out  of  the  market,  it  did  not  destroy 
competition.  It  is  true,  competition  ceased  between 
the  factory  and  the  hand-loom  weaver,  but  it  im- 
3nediately  commenced  between  small  manufacturers. 
Hence,   instead   of    destroying    competition,   it   only 


THE  ECONOMIC  AND  SOCIAL  ASPECTS  OF  TRUSTS      7 

changed  the  plane  upon  which  the  competition  took 
place.  Again,  when  competition  began  between  small 
manufacturers,  it  was  much  fiercer  than  ever  it  had 
been  between  hand-loom  weavers.  The  same  was  true 
when  small  manufacturers  began  to  integrate  into  cor- 
porations. The  products  of  the  corporation  undersold 
those  of  the  small  manufacturer,  and  practically  drove 
him  from  the  market ;  but  that  did  not  destroy  com- 
petition, for,  when  the  small  manufacturer  ceased  to 
compete  with  the  large  corporation,  another  corpora- 
tion took  his  place,  and  competition  was  raised  to  a 
still  higher  plane ;  that  is,  to  a  plane  between  stronger 
contestants,  in  which  the  competition  was  necessarily 
more  severe.  What  was  true  of  the  hand-loom  weaver 
and  small  manufacturer,  and  the  small  manufacturer 
and  the  corporation,  is  now  true  of  trusts.  By  the  use 
of  large  capital,  improved  machinery  and  better  facili- 
ties,the  trust  can  and  does  undersell  the  corporation  ; 
but  that  is  not  destroying  competition.  It  is  simply 
making  trusts  necessary  in  all  large  industries,  and 
thus  again  raising  the  plane  of  competition,  from  the 
domain  of  corporations  to  that  of  trusts.^  The  com- 
petition between  trusts  naturally  tends  to  reduce  the 
profits  to  a  closer  margin  than  did  the  competition  be- 
tween corporations,  for  the  reason  that  the  larger  the 
business  transacted  the  smaller  the  percentage  of 
profit  necessary  to  its  success.  Thus,  instead  of  the 
concentration  of  capital  tending  to  destroy  competition 

^Witness  the  organizations  of  the  sugar  warehouse  men,  the 
tin  and  copper  manufacturers,  the  millers,  the  farmers  and 
fruit  growers,  all  of  which  have  been  made  necessary  by  the 
severe  competition  caused  by  large  concerns  which  can  do  the 
business  at  the  minimum  cost. 


8  TRUSTS  AND   THE   PUBLIC 

and  encourage  large  profits,  the  reverse  is  true.  It 
tends  to  raise  the  plane  and  increase  the  intensity  of 
competition,  and  minimize  the  margin  of  profits. 

Third :  The  third  complaint  is  that  the  concentration 
of  capital  tends  to  increase  prices.  This  is  the  most 
important  charge  of  all.  Whatever  the  advantage  de- 
rived from  the  concentration  of  capital  in  productive 
industry  may  be,  if  it  tends  to  increase  the  prices  of 
commodities,  that  would  be  an  evil  sufficient  to  war- 
rant its  arrest ;  and  as  the  whole  history  of  industrial 
progress  has  been  in  the  direction  of  the  concentration 
of  capital  into  larger  and  larger  establishments,  it 
would  prove,  if  the  charge  be  true,  that  the  industrial 
development  of  modern  civilization  is  on  the  wrong 
track,  and  nothing  short  of  revolution  could  redeem 
us  from  its  evil  effects. 

Fortunately  for  civilization,  all  the  facts  of  industrial 
history  point  the  other  way.  It  is  a  well-established 
principle,  both  in  economics  and  practical  business, 
that  capital  is  most  effective  in  producing  consumable 
wealth  where  it  is  most  concentrated.  The  modern 
factory  and  railroad  systems,  which  have  done  so  much 
to  cheapen  wealth  and  increase  the  comfort  and  con- 
venience of  society  during  the  present  century,  would 
have  been  absolutely  impossible  upon  any  other  prin- 
ciple than  that  of  colossal  aggregation  of  capital. 

That  the  concentration  of  capital  into  large  enter- 
prises is  an  economic  and  social  advantage,  tending  to 
increase  production,  to  lower  prices,  and  to  raise  w^ages, 
is  d'^monstrated  in  the  history  of  every  progressive 
country  and  every  successful  manufacturing  establish- 
ment in  the  world.  In  short,  the  use  of  large  capital, 
the  specialization  of  labor,  and  the  concentration  of 


THE  ECONOMIC  AND  SOCIAL  ASPECTS  OF  TRUSTS     9 

productive  power  are  the  infallible  evidence,  not  only 

that  wealth  is  being  more  economically  and  abundantly 

produced,  but  that  the  community  in  general,  and  the 

wage-receivers    in    particular,   are   obtaining  a    con- 

stantl}"^  increasing  proportion  of  the  product.     Large 

establishments  sustain  the  same   economic  relation  to 

small  ones  that  steam  and  electricity  sustain  to  hand 

labor.     The  railroad   supplanted    the   pack-horse  and 

stage  coach  for  no  other  reason  than  that  it  served  the 

community  better.     When  the  small  farm  or  factory 

is  driven  from  the  field  by  the  larger  one,  it  is  always 

because  the  latter  does  the  work  better  and  cheaper 

than  the  former.     As  an  illustration  of  this  principle, 

let  us  take  the  progress  in  the  cotton  industry  in  the 

United  States  since  1830.     In  that  industr}^,  according 

to  the  United  States  census  for  1880,  the  investment 

of  capital,  the  number  of  establishments,  amount  and 

price   of  product,  and  wages  paid   in  1830  and  1880 

were  as  follows : 

1830  1880 

801  756 

,      $40,612,984  $208,280,346 


59,514,926      607,264,241 

62,208  172,544 

1,246,703        10,653,435 


Number  of  establishments      .     . 

Aggregate  capital  invested     .     . 

Number  of  lbs.  cloth  produced  . 

Number  of  persons  employed 

Number  of  spindles  employed     . 

Amount  of  capital  to  establishment   .  $50,702  $275,503 

Ratio  of  lbs.  produced  to  capital     .     .     1.4  to  $1.00      2.4  to  $1.00 

Ratio  of  capital  to  persons  employed    $652.85  to  1   $1207.17  to  1 

[1  The  census  of  1890  showed,  for  the  cotton  industry  :  Number 
of  establishments  905  ;  total  capital  invested  $354,020,843  ;  aver- 
age capital  to  establishment  $391,183  ;  persons  employed  218,876  ; 
number  of  spindles  14,188,103  ;  average  weekly  wages  of  men 
operatives  $7.62,  of  women  $5.44;  value  of  products  $267,981,- 
724  ;  per  capita  consumption  of  raw  cotton  18  lbs.,  (this  in  1880 
was  15  lbs.).  The  price  of  sheetings  per  yard,  August  1899,  is  4J 
cents.] 


10  TRUSTS  AND  THE  PUBLIC 

1830  1880 

Ratio  of  spindles  to  persons  employed  22  to  1             62  to  1 

Ratio  of  capital  to  spindles  employed  $32.58  to  1       $19.55  to  1 

Ratio  of  lbs.  produced  to  persons  em- 
ployed,        950.7  to  1       3519.5  to  1 

Ratio  of  lbs.  produced  to  spindles      .  47.6  to  1           57.0  to  1 

Annual  consumption  of  lbs.  of  cotton 

cloth  per  capita 5.90               13.91 

Price  of  cotton  cloth  per  yard  [sheet- 

ings] 17  cts.              7  cts. 

Operative's  wages  per  week  1    .     .     .  $2.55               $5.40 

It  will  thus  be  seen  that  in  the  Y56  large  establish- 
ments in  1880,  in  which  the  aggregate  capital  invested 
was  five  times  as  great  as  that  in  801  small  establish- 
ments in  1830,  the  capital  invested  per  spindle  was 
one-third  less,  the  number  of  spindles  operated  by  each 
laborer  nearly  three  times  as  large,  the  product  per 
spindle  one-fourth  greater,  the  product  per  dollar 
invested  twice  as  large,  the  price  of  the  cotton  cloth 
nearly  sixty  per  cent,  less,  the  consumption  per  capita 
of  the  population  over  one  hundred  per  cent,  greater, 
and  wages  more  than  double.  AVhat  is  true  of  this 
industry  is  true  of  all  industries  where  the  concentra- 
tion of  capital  has  taken  place. 

It  may  be  urged  that  the  cotton  industry  has  never 
been  under  the  control  of  a  trust  or  syndicate,  and  that 
the  evil  effects  of  concentration  do  not  begin  until  the 
trust  period  is  reached.  Among  the  most  formidable 
concentrations  of  capital  which  have  come  under  the 
unfortunate  name  of  trusts  or  syndicates   are  those 

1  These  are  women's  wages.  I  have  taken  the  wages  of  women 
because  there  were  not  men  enough  employed  as  cotton  oper- 
atives in  1 830  to  warrant  a  fair  comparison  ;  but  to  the  extent 
that  they  were  so  employed  their  wages  have  risen  in  a  similar 
ratio  to  those  of  women. 


THE  ECONOMIC  AND  SOCIAL  ASPECTS  OF  TRUSTS      II 

devoted  to  railroading,  telegraphing,  and  the  produc- 
tion of  petroleum.  There  are  others  of  similar  pro- 
portions, but  these  stand  as  the  monster  evils  most  to  be 
feared  in  this  country.  And,  furthermore,  these  trusts 
have  been  in  existence  the  longest,  and  the  true  eco- 
nomic tendency  of  such  organizations  will  therefore  be 
most  clearly  indicated  in  their  history.  What  are  the 
facts  in  relation  to  these  ? 

We  will  take,  first,  petroleum.  ITot  only  is  the 
production  of  petroleum  in  the  hands  of  a  trust,  but  it 
is  probably  the  largest  trust  in  the  world.  The  worst 
of  these  evils,  therefore,  may  be  expected  to  be  found 
in  the  history  of  the  Standard  Oil  Company  ;  and  if 
there  are  any  special  advantages  in  trusts  we  may 
expect  to  find  there  the  best  results  also. 

There  are,  now,  several  economic  advantages  in  con- 
nection with  these  institutions  that  are  not  to  be  found 
in  individual  corporations.  When  corporations  were 
isolated  they  were  in  competition  with  each  other,  not 
only  in  the  selling  market,  but  in  the  productive  proc- 
ess also,  and  each  one  who  discovered  an  improvement 
in  the  manufacture  naturally  took  special  pains  to  keep 
it  from  all  competitors.  Under  trust  companies  this 
is  reversed.  No  sooner  is  an  improvement  found  by 
any  one  corporation,  than  it  is,  from  common  interest, 
applied  to  all;  hence  the  economy  which  was  previ- 
ously confined  to  a  single  corporation  now  becomes  a 
part  of  the  process  of  the  whole  product  in  the  market, 
— at  least,  so  far  as  the  trust  is  concerned.  Again 
when  corporations  combine  they  are  enabled  to  manu- 
facture all  their  own  supplies  on  the  largest  possible 
scale,  and  are  thereby  enabled  to  employ  the  most 
improved  methods  of  production  in  every  department. 


12  TRUSTS  AND   THE  PUBLIC 

This  is  exactly  what  has  been  accomplished  by  trusts. 
For  example,  before  the  organization  of  the  Standard 
Oil  Company  in  1872,  oil  had  to  be  transported  from 
the  wells  to  the  market  by  the  railroads  in  small 
quantities,  in  barrels,  tanks,  etc.  After  the  organiza- 
tion of  that  company,  these  various  methods  were 
superseded  by  one  general  pipe  line,  which  takes  the 
oil  directly  from  the  well  to  the  market.  There  are 
two  such  lines  reaching  Xew  York,  with  a  capacity  of 
25,000  barrels  per  day.  There  is  also  one  such  line  to 
Philadelphia,  one  to  Baltimore,  another  to  Buffalo, 
another  to  Cleveland,  and  another  to  Pittsburg,  and 
one  is  now  being  laid  to  Chicago.  This  was  an  under- 
taking absolutely  impracticable  for  any  of  the  smaller 
corporations.  The  result  is  a  saving  of  66f  per  cent, 
on  the  cost  of  transportation  alone.  In  1872  it  cost 
$1.50  to  transport  a  barrel  of  oil  to  New  York ;  to-day 
it  costs  only  50  cents.  In  1872,  barrels  cost  $2.35 
each ;  to-day  the  Standard  Oil  trust  manufactures 
them  for  its  own  use  at  $1.25  each,  a  reduction  of  47 
per  cent.,  or  a  saving  of  nearly  $4,000,000  a  year.  In 
the  cost  of  the  manufacture  of  tin  cans,  a  saving  of  50 
per  cent,  has  been  made,  the  price  having  been  reduced 
from  30  to  15  cents  per  can  since  1874.  As  this  com- 
pany uses  about  30,000,000  tin  cans  a  year,  that  makes 
a  saving  of  over  $4,500,000  annually.  The  same  is 
true  of  wooden  cases,  which  in  1874  cost  20  cents  each. 
The  company  now  manufactures  them  for  itself  at  a 
cost  of  13  cents  each,  being  an  annual  saving  of  about 
$1,250,000. 

Who  was  benefited  by  all  this  economy,  is  the 
question  that  naturally  arises  in  this  connection.  Did 
it  go  into  the  pockets  of  the  Standard  Oil  Company  as 


THE  ECONOMIC  AND  SOCIAL  ASPECTS  OF  TRUSTS      1 3 

profits,  or  did  it  accrue  to  the  cominimity  in  the  re- 
duced price  of  oil  ?  That  question  can  best  be  answered 
by  the  facts,  as  shown  in  the  following  table  :  ^ 


Price 

Price 

Year 

Shipments  from 

Stock  of  crude  oil 

of  crude  oil 

per  gallon  of 

wells.     Bbl. 

on  hand.    Bbl. 

per  gallon 

refined  oil  for 

at  wells. 

export. 

1871 

5,667,891 

568,858 

10.53  cts. 

34.24  Cts. 

1872 

5,899,943 

1,174,000 

9.43 

33.75 

1873 

9,499.775 

1,625,157 

4.12 

18.21 

1874 

8,831,500 

3.705,639 

2.81 

13.09 

1875 

8,934,938 

3,751,758 

2.96 

12.99 

1876 

9,583,949 

1,936,735 

5.99 

19.12 

1877 

13,496,644 

3,857,098 

5.68 

15.92 

1878 

13,750,090 

4.307,590 

2.76 

10.87 

1879 

16,336,586 

8,094,496 

2.09 

8.08 

1880 

15,839,030 

16,606,344 

2.24 

9.12 

1881 

19,340,031 

35,333,411 

2.30 

8.05 

1883 

33,094,309 

34,335,174 

1.87 

7.41 

1883 

21,967,636 

35,715,565 

2.53 

8.14 

1884 

24,053,902 

36,873,893 

1.99 

8.28 

1885 

24,029,434 

33,836,939 

3.11 

7.86 

1886 

36,333,445 

33,395,885 

1.69 

7.07 

1887 

36,627,191 

28,310,383 

1.59 

6.75 

It  will  be  seen  by  the  above  that  from  1871,  the  year 
before  the  Standard  Oil  Compaay  was  organized,  to 
18T8,  the  year  before  the  pipe  line  was  laid,  the  price 
of  refined  oil  fell  13.37  cents  per  gallon.  From  the  lay- 
ing of  the  pipe  line  to  the  organization  of  the  trust  in 
1881  it  fell  2.82  cents  per  gallon,  and  from  the  organiza- 
tion of  the  trust  to  1887  it  fell  1.30  cents  per  gallon. 
Thus,  through  the  economies  introduced  into  the  pro- 
duction and  transportation  of  petroleum  since  1871,  the 
price  of  reflned  oil  has  been  reduced  17.49  cents  per 

^  See  New  York  Produce-Exchange  Reports,  1873-4,  p.  483 ; 
1875-6,  p.  445  ;  1876-7,  p.  405 ;  1883,  p.  773.  Also  New  York 
Chamber  of  Commerce  Reports  for  1869-70,  p.  45  ;  1871-3,  p.  54  ; 
1875-6,  p.  50;  1878-9,  p.  98;  1883-3,  p.  67;  1886-7,  p.  65;  1887-8,  p.  73. 


14  TRUSTS   AND   THE   PUBLIC 

gallon,  or  Y2  per  cent.,  being  a  saving  to  the  consumers 
of  the  998,953,011  gallons  of  refined  oil  used  last  year 
alone  of  $174,716,881.1 

It  may  be  said  that  this  great  fall  in  the  price  is 
partly  the  result  of  the  fall  in  price  of  crude  oil. 
That  is  true,  but  much  of  this  fall  is  also  due  to  the 
improved  facilities  applied  at  the  wells  by  this  com- 
pany. But  were  it  true  that  this  reduction  is  all  at- 
tributable to  causes  over  which  the  Standard  Oil  trust 
has  no  control,  which  is  absurd,  that  cannot  be  said  of 
the  fall  in  the  price  of  refined  oil  in  excess  of  that  of 
the  crude.  It  will  be  seen  from  the  table  quoted  above, 
that  since  1871  the  price  of  crude  oil  has  fallen  8.93 
cents  per  gallon,  leaving  a  net  fall  in  the  price  of  re- 
fined oil,  over  and  above  that  of  the  crude,  of  8.56 
cents  per  gallon,  or  1.81  cents  per  gallon  more  than 
the  total  price  now  paid  for  it.  This  reduction  in  price 
is  due  exclusively  to  the  improved  methods  introduced 
into  the  various  processes  of  refining  and  transporting 
oil.  If  the  price  of  refined  oil  had  only  fallen  in  the 
same  ratio  as  that  of  crude,  it  would  to-day  cost  the 
consumer  15.30  cents  per  gallon  instead  of  6.75  cents, 
the  price  at  which  it  was  sold  in  1887.  It  will  thus 
be  seen  that,  giving  the  opposition  the  full  benefit  of 
all  the  doubts,  the  consumers  of  refined  oil  in  1887  had 
a  clear  gain  of  $85,410,482,  as  the  result  of  the  efforts 
of  the  Standard  Oil  Company  ;  and  still  we  are  told 
that  trusts  tend  to  advance  prices  to  the  consumer. 

Another  trust  company  that  has  been  singled  out  for 
censure  is  the  one  engaged  in  the  manufacture  of  cot- 

P  For  more  complete  and  recent  data  of  oil  production  and 
prices  see  "  Crusade  against  Prosperity,"  the  sixteenth  paper  in 
thii  Tolum«.] 


THE  ECONOMIC  AND  SOCIAL  ASPECTS  OF  TRUSTS       1 5 

ton-seed  oil.  So  strong  is  the  feeling  against  trusts, 
that  an  effort  has  recently  been  made  to  impose  a  tax 
upon  the  product  of  this  company,  not  to  make  it 
reduce,  but  to  force  it  to  increase  the  price  of  its  pro- 
duct, in  order  that  hog-fat  manufacturers  might  have  a 
special  advantage.  Notwithstanding  this  opposition, 
the  price  of  cotton-seed  oil  has  fallen,  along  with  the 
economic  improvement  in  its  production  introduced  by 
the  trust.  In  1878  the  average  price  of  standard  sum- 
mer yellow  oil  was  47.94  cents  per  gallon.  In  1883, 
the  year  before  the  organization  of  the  trust,  it  had 
only  fallen  to  47.08  cents  per  gallon.  In  1887,  four 
3'ears  after  the  organization  of  the  trust,  it  had  fallen 
to  38.83  cents  per  gallon.^  In  other  words,  during  these 
four  years  the  price  of  cotton-seed  oil  fell  more  than 
eight  times  as  much  as  it  did  during  the  five  years 
before  the  trust  was  formed.^ 

What  is  true  of  petroleum  and  cotton-seed  oil  is  also 
true  of  sugar  and  other  products.  Although  the  sugar 
trust  has  not  been  organized  long  enough  to  give  any 
specific  results,  the  concentration  of  capital  in  that  in- 
dustry has  been  steadily  increasing  for  years,  and  the 
prices  show  a  commensurate  tendency  downward.  In 
1880,  the  price  of  "  Grocers'  Standard  A  White  Sugar  " 
was  $9.48|-  per  barrel.  It  has  continued  to  fall  every 
year  since  that  date,  until  in  1887  it  was  only  $5.66  ^ 

1  These  facts  are  taken  from  the  prices  quoted  in  the  market 
reports  of  the  New  York  Daily  Commercial  Bulletin  on  the  first 
of  every  month  from  January    1878  to  December,  1887. 

[2  The  price  of  cotton-seed  oil  is  now,  August  1899,  25  cents 
per  gallon.] 

8  See  New  York  Chamber  of  Commerce  Reports  for  1880-1,  p. 
17  ;  1883-3,  p.  18  ;  1883-4,  p.  18  ;  1884-5,  p.  18  ;  1885-6,  p.  18  ; 
1886-7,  p.  18 ;    1887-8,  p.  18. 


l6  TRUSTS   AND   THE   PUBLIC 

per  barrel,  and  other  grades  of  sugar  and  molasses 
have  fallen  in  a  similar  and  some  in  even  a  greater 
ratio.^ 

Another  of  the  large  organizations  against  which  the 
hardest  things  are  said  is  the_jailrpad  sjnclicate.  We 
hear  a  great  deal  about  railroad  monopolies  and  their 
robbery  of  the  public  by  the  high  rates  made  possible 
by  these  colossal  combinations.  An  examination  of 
the  freight  tariffs  on  the  trunk  lines  shows  the  same 
general  reduction  in  prices  that  we  have  seen  in  the 
case  of  the  Standard  Oil  and  other  trusts.  The  average 
rates  for  sending  a  hundred  pounds  of  freight  from 
New  York  to  Chicago  in  1862  and  in  1888  were  as 
follows,  showing  a  reduction  of  51  per  cent.: 

1863  1888 

First  class $1.63  §0.75 

Second  class 1.32  .65 

Third  class 1.05  .50 

Fourth  class 66  .35 

It  may  be  added  that  the  rates  for  the  second  and 
third  chisses  have  each  been  advanced  five  cents  per 
hundred  pounds,  through  the  beneficial  influence  of  the 
interstate  commerce  law. 

Another  formidable  organization  that  has  afforded 
a  theme  for  considerable  moralizing  is  that  of  the  tele-,, 
graph  system. .  The  Western  Union  Telegraph  Com- 
pany is,  perhaps,  next  to  the  Standard  Oil  trust,  re- 
garded as  the  worst  mono])oly  in  this  country.  It  is 
well  known  that,  prior  to  1866,  our  telegraphic  service 
was  done  through  a  host  of  small  local  companies.     To 

P  At  the  time  this  article  was  published.  September  1888.  the 
price  of  granulated  sugar  was  7f  cents  per  pound.  It  is  now, 
August  1899,  5^  cents.] 


THE  ECONOMIC  AND  SOCIAL  ASPECTS  OF  TRUSTS      1/ 

send  a  message  across  the  country  involved  its  going 
through  the  hands  of  not  less  than  half  a  dozen  com- 
panies. In  1866  these  were  integrated  into  one  organi- 
zation under  the  name  of  the  "Western  Union  Telegraph 
Company. 

Since  the  concentration  of  capital  in  the  telegraphic 
service  under  this  organization,  the  rates  for  messages 
from  New  York  to  the  large  centers  throughout  the 
country  have  been  reduced  85  per  cent.,  as  is  shown  by 
the  following  table : 

Rates  for  sending  ten  ivords  from  Neio  York : 

To  Minneapolis  ^  . 
"  Buflfalo  . 
"  Wash'gton,  D. 
"  San  Francisco 
"  Oregon  .  .  . 
"  W.  Territory 

n.  this  company  sent  only 
6,404,595  messages,  it  cost  the  company,  on  an  average, 
63,4  cents  per  message  ;  and,  in  order  to  make  a  profit 
on  the  capital  invested,  the  average  price  charged  to 
the  community  was  $1,047  per  message,  leaving  41.3 
cents  profit  per  message.  In  1887,  when  the  company 
sent  47,394,530  messages,  the  average  cost  per  message 
was  23  cents ;  and  the  average  toll  to  the  community 
was  reduced  to  30.4  cents  per  message,  leaving  only 
7.4  cents  profit  per  message.'^  It  will  thus  be  seen  that 
during  the  twenty  years  of  this  "  monopoly  "  the  aver- 

pThe  rate  to  Minneapolis  is  now  (1899)  50  cent?.] 

*The  averajre  cost  per  message  in  1897-98  was  24.7  cents,  and 

the  average  toll  to  the  public  80.1  cents  per  message,  leaving  a 

profit  of  5.4  cents. 
2 


1866 

1888 

To  Chicago    .    . 

$2.20 

$0.40 

"  St.  Louis  .     . 

2.55 

.40 

"  St.  Paul    .     . 

2.25 

.50 

"  Cincinnati     . 

1.99 

.40 

"  New  Orleans 

3.25 

.60 

"  Galveston 

5.50 

.75 

Moreover,   in 

1868, 

wh( 

1866 

1888 

$2.10 

$0.60 

.75 

.25 

.75 

.25 

7.45 

1.00 

10.20 

1.00 

12.00 

1.00 

1 8  TRUSTS  AND   THE   PUBLIC 

age  cost  of  messages  to  the  community,  to  all  points, 
has  been  reduced  74.3  cents  per  message,  or  over  TO 
per  cent. ;  and  that  the  profits  have  been  reduced  33 
cents  per  message.  In  other  words,  the  total  cost  of 
the  service  to  the  community  to-day  is  10.9  cents  per 
message  less  than  the  profits  alone  were  before  the 
organization  of  this  company. 

It  may  perhaps  be  said  that,  although  these  trusts 
have  constantly  resulted  in  reducing  prices,  should  the 
government  run  the  business  a  still  greater  saving 
would  be  accomplished.  This  idea  has  been  so  exten- 
sively and  favorably  received  that  the  demand  for 
government  ownership  of  railroads  and  telegraphs 
has  become  one  of  the  stock  resolutions  in  all  indus- 
trial reform  movements,  and  the  proposition  for  the 
government  to  take  possession  of  the  telegraph  lines 
is  actually  before  Congress  in  a  bill  introduced  in  the 
Senate. 

There  are  many  reasons  why  this,  in  the  nature  of 
things,  would  not  be  an  improvement.  Arbitrary 
monopoly  is  the  natural  harbinger  of  irresponsibility, 
incompetency  and  waste,  and  hence  naturally  tends  to 
give  inferior  products  at  maximum  prices.  While  this 
is  true  of  all  artificial  monopoly,  it  is  especially  true 
of  government  monopoly.  The  head  of  a  government 
enterprise,  having  no  interest  in  the  profit,  has  no  nec- 
essary incentive  for  developing  improved  methods  of 
service.  On  the  contrary,  he  has  a  direct  interest  in 
keeping  the  number  of  employees  at  the  maximum, 
because,  by  the  disposition  of  industrial  favors,  he  can 
command  political  allegiance,  which  is  the  power  he 
chiefly  relies  upon  to  retain  his  position.  And  this 
tendency  is  strongest  under  democratic  institutions,  be- 


THE  ECONOMIC  AND  SOCIAL  ASPECTS  OF  TRUSTS      19 

cause  it  is  there  that  the  political  potency  of  the  laborer 
is  the  greatest.  Under  a  system  where  political  in- 
fluence, rather  than  economic  efficiency,  is  thus  the 
condition  of  employment,  and  Avhere  there  is  little 
responsibility  and  no  redress  for  the  injury  and  loss 
caused  by  delay  and  blunders  through  incapacity,  poor 
or  at  best  mediocre  service  must  necessarily  result. 

Nor  is  this  mere  speculation,  for  extensive  experi- 
ments in  government  telegraphy  have  already  been 
tried,  and  the  facts  speak  for  themselves.  In  all 
European  countries  the  telegraphic  service  is  in  the 
hands  of  the  state.  We  therefore  have  ample  oppor- 
tunities for  testing  the  matter  b}''  experience.  It  should 
be  noted  here,  that  under  private  enterprise  in  this 
country  the  company  is  responsible  for  losses  caused 
by  the  failure  or  delay  in  delivery,  while  no  such  pro- 
tection is  afforded  to  the  interest  of  the  citizens  under 
any  existing  system  of  state  telegraphy.  As  under 
our  postal  system,  the  government  is  entirely  irrespon- 
sible, at  least  to  the  individual  with  whom  it  is  doing 
business.  If  the  citizen  is  utterly  ruined  by  the  ineffi- 
ciency of  the  department,  he  has  absolutely  no  redress ; 
he  pays  his  money  and  takes  all  the  risk. 

The  most  efficient  system  of  state  telegraphy  in  the 
world,  and  the  one  w^hich  gives  the  lowest  rates  of  toll 
to  the  public,  is  that  of  Great  Britain.  England  pos- 
sesses exceptionally  favorable  conditions  for  giving 
cheap  telegraph  service.  In  many  important  respects 
her  advantages  are  superior  to  ours.  She  has  a 
limited,  thickly  settled,  well-cleared  country,  while  we 
have  an  extensive,  sparsely  settled,  ill-cleared  country 
to  operate  in.  The  extreme  distance  between  terminal 
stations  in  England  does  not  exceed  600  miles,  with  (in 


20  TRUSTS  AND   THE  PUBLIC 

1887)  29,895  miles  of  line,  carrying  173,639  miles  of 
wire  and  cable,  with  6,500  offices,  and  transmitting 
about  50,000,000  messages  per  an  num. ^  In  this  coun- 
try the  extreme  distance  between  terminal  stations  is 
nearly  5,000  miles,  with  176,000  miles  of  line,  carrying 
630,000  miles  of  wire  and  cable,  maintaining  17,000 
offices  to  do  the  business  of  55,000,000  messages.^ 

"With  such  natural  advantages  over  this  country,  and 
with  wages  one-fourth  lower,  if  there  is  any  efficacy  in 
government  ownership  Great  Britain  ought  to  be  able 
to  serve  the  public  vastly  cheaper  than  private  enter- 
prise in  this  country  can  possibly  do.  Is  such  the 
case  ?     Let  the  facts  answer. 

The  rate  of  tolls  in  England  since  the  reduction  two 
years  ago  is  12  cents  for  twelve  words,  including  date, 
address  and  signature.  As  the  date,  address  and  sig- 
nature will  average  from  ten  to  fourteen  words,  it  will 
cost  from  23  cents  to  25  cents  to  send  a  ten-word  de- 
spatch, which  is  but  a  fraction  less  than  the  rate  in  this 
country.  The  press  despatches  are  transmitted  much 
more  cheaply  here  than  in  England.  But  even  this 
seeming  cheapness  in  the  English  service  is  unreal,  for 
the  rate  of  toll  does  not  represent  the  price  the  public 
actually  pays  for  it ;  because,  with  the  exception  of  the 
first  two  years  of  government  ownership,  the  postal 
telegraph  has  never  paid  expenses,  as  is  shown  by  the 
following  table,^  the  deficiency  of  course  having  to  be 
made  up  out  of  taxes : 

[1  In  1897-98  there  were  10,483  offices,  and  about  83,000,000  mes- 
sages of  all  descriptions  were  sent.] 

[2  During  the  year  1897-98  the  Western  Union  Telegraph  Com- 
pany maintained  22,210  offices,  foi-warded  62,173,749  messages, 
and  operated  189,847  miles  of  line,  carrjnng  874,420  miles  of  wire.] 

^  Parliamentary  Reports  on  Postal  Telegraph,  1886-87. 


THE  ECONOMIC  AND  SOCIAL  ASPECTS  OF  TRUSTS      21 
Postal  Telegraph  Deficiencies  in  England.^ 


1872  . 

$771,036.82 

1880  . 

.  $143,563.78 

1873  . 

854,335.12 

1881  . 

4,773.94 

1874  . 

997,910.50 

1882  . 

.   540,166.04 

1875-76 

919,842.00 

1883  . 

.   683,673.'96 

1877  . 

898,843.43 

1884  . 

.  1,661,348.33 

1878  . 

907,518.72 

1885  . 

.  1,741,228.50 

1879  , 

547,774.18 

1886  . 

.  2,255,232.00 

It  will  be  seen  from  this  table  that  the  deficiency  in 
the  telegraphic  service  of  Great  Britain  has  averaged 
nearly  a  million  dollars  a  year  ever  since  state  owner- 
ship began,  and  in  1886,  the  first  full  year  of  the  pres- 
ent rate,  the  deficit  was  over  two  and  a  quarter  mil- 
lion dollars,  to  which  must  be  furtlier  added  about  one 
and  a  half  million  dollars  for  interest  on  the  bonds 
given  for  the  plant  when  the  government  purchased 
the  telegraph  in  1870.^  Thus,  in  addition  to  what  is 
directly  paid  for  the  service  by  the  consumer,  about  7^ 
cents  per  message  is  paid  indirectly  in  taxes,  making 
a  total  of  over  30  cents  per  message  of  ten  words ; 
while  the  cost  in  this  country  is  only  20  cents  for  ten 
words  in  large  cities  and  25  cents  for  ten  words  for 
distances  of  four  or  five  hundred  miles,  the  average  for 
all  the  messages,  both  long  and  short,  being  only  30.4 
cents  per  message. 

From  these  facts  it  will  be  seen  that  with  natural 
disadvantages  in  this  country  which  make  it  necessary 
to  cover  eight  times  as  much  distance  between  the  ter- 
minal  stations,  to  have  three  times  as  many  miles  of 
line,  three  and  a  half  times  as  many  miles  of  Avire  and 
cable,  and  to  maintain  two  and  a  half  times  as  many 

PThe  deficit  in  1897-98  amounted  to  $1,. 504,355  ;  or,  adding 
interest  ou  bonds  given  for  the  plant,  about  $3,000,000.] 


22  TRUSTS   AND    THE   PUBLIC 

offices,  and  with  wages  much  higher,  private  enterprise 
can  render  about  the  same  amount  of  telegraphic  serv- 
ice as  cheaply  and  with  more  efficiency  and  despatch 
than  is  done  by  state  ownership  in  England.  And,  it 
may  be  added,  that  those  who  do  the  business  here 
make  a  living  profit,  while  there  they  do  it  for  nothing, 
or  run  into  debt.  The  proposition  to  substitute  state 
telegraphy  for  private  enterprise  in  this  country,  in 
the  face  of  such  facts,  is  surely  entitled  to  be  des- 
ignated by  some  other  name  than  statesmanshi]). 

Those  who  advocate  governmental  control  of  large 
industries  would  probably  refer  us  to  the  management 
of  the  post-office,  which  is  always  cited  as  the  model  ex- 
periment in  collective  ownership.  The  fact  is  pointed 
out  that  it  formerly  cost  twenty  cents  to  carry  a 
letter  across  the  country  while  it  now  costs  only  two 
cents,  as  an  evidence  of  the  economic  success  of  the 
state  control.  There  are  few  facts  which  the  public 
accept  more  implicitly  and  regard  as  more  conclusive 
than  these ;  yet  there  are  few  more  delusive  and  mis- 
leading. It  is  true  that  we  can  now  send  a  letter  three 
thousand  miles  for  two  cents,  but  if  we  examine  the 
matter  a  little  closer  we  shall  see  that  this  is  not  due 
to  anything  the  government  has  done.  All  the  govern- 
ment does  in  the  postal  service  is  to  collect,  assort, 
stamp  and  bag  outgoing,  and  deliver  incoming,  letters ; 
give  out  and  receive  money  orders  ;  and  render  an  ac- 
count of  the  business  done.  No  improved  methods 
have  been  introduced  during  the  last  twenty-five  years 
in  that  part  of  the  postal  system  which  the  government 
controls.  Letters  are  stamped  bj"  hand,  and  delivered 
and  collected  by  individual  messengers,  just  as  they 
were  fifty  years  ago.     All  the  economy  in  the  postal 


THE  ECONOMIC  AND  SOCIAL  ASPECTS  OF  TRUSTS      23 

service  has  come  from  the  improved  methods  of  trans- 
porting the  mail,  and  this,  it  should  be  remembered,  is 
all  done  by  private  enterprise.  From  the  moment  the 
letter-bag  leaves  the  door  of  the  post-office  it  enters  the 
hands  of  private  enterprise.  It  is  the  great  railroads, 
steamship  companies,  etc.,  and  not  the  government,  that 
have  made  it  possible  for  letters  to  go  three  thousand 
miles  for  two  cents.  Indeed,  it  is  more  than  probable 
that  had  the  postal  system  been  under  the  control  of 
private  enterprise,  instead  of  that  of  the  state  (managed 
by  mediocre  politicians),  letters  would  ere  this  have 
been  stamped  by  machinery  and  collected  from  street 
boxes  by  electricity,  and  that  other  improvements  would 
have  been  introduced  which  would  have  sufficiently 
economized  labor  to  render  one-cent  postage  possible 
without  running  into  debt. 

There  is  still  another  class  of  objectors  to  the  con- 
centration of  capital  in  the  form  of  trusts.  These  are 
sufficiently  careful  and  well  informed  of  the  facts  to 
know  that  trusts  have  not,  as  is  commonly  asserted,  yet 
shown  any  tendency  to  increase  prices.  Their  fears, 
however,  all  relate  to  what  may  happen  in  the  future, 
when  the  trusts,  having  organized  in  all  branches  of  in- 
dustry, become  masters  of  the  situation.  It  is  not,  ac- 
cording to  them,  until  that  point  of  industrial  concen- 
tration is  reached,  that  the  evils  of  trusts  will  be  upon 
us,  but  when  that  time  comes  it  will  be  too  late  to  call 
a  halt.  The  community  will  then  be  completely  at  the 
mercy  of  the  colossal  capitalists,  and  we  may  expect 
not  only  a  rise  in  the  price  of  the  necessaries  of  life, 
but  all  the  kindred  evils  monopoly  implies. 

This  statement  has  a  more  plausible  seeming  than 
those  which  fly  in  the  face  of  all  known  facts,  but  upon 


24  TRUSTS   AND    THE   PUBLIC 

examination  it  will,  I  think,  be  found  to  be  scarcely 
less  erroneous.  If  the  trusts  control  all  the  productive 
processes,  it  is  asked,  what  is  to  prevent  them  from 
putting  prices  at  whatever  height  they  choose  ?  I  an- 
swer, that  which  is  to  them  the  most  important  of  all 
considerations,  namely,  self-interest.  If  it  could  be 
shown  that  their  interest  would  be  promoted  by  raising 
prices,  I  freely  confess  that  there  would  be  little  hope 
of  the  fact  being  otherwise.  It  should  always  be  re- 
membered that  capital  is  one  of  the  most  sensitive 
things  in  the  world  ; — it  has  been  well  said  that  noth- 
ing is  so  cowardly  as  a  million  dollars,  except  two  mil- 
lion dollars.  Capital  always  shrinks  at  the  sight  of 
losses,  and  it  will  run  almost  any  risk  for  probable 
profits.  Knowing  this  as  no  others  do,  the  monopolists, 
so-called,  see  very  clearly  that  if  they  put  their  prices 
so  high  that  the  margin  of  profit  is  abnormal,  capital 
will  at  once  leave  other  industries  and  rush  into  theirs. 
Capital  is  ever  waiting  for  just  such  opportunities.  It 
may  be  said  that  if  new  capital  comes  into  the  business 
they  will  buy  it  up.  But  that  takes  mone}'',  and  a  mil- 
lion dollars  invested  in  buying  up  a  competitor  might, 
with  much  more  safety,  be  invested  in  reducing  prices ; 
because  a  new  competitor  may  prove  too  strong  to  be 
bought  up,  in  which  case  the  monopolists  themselves 
may  be  driven  from  the  field  or  have  their  profits  re- 
duced to  the  lowest  point.  They  have  therefore  a 
direct  interest  in  keeping  prices  at  least  sufficiently 
low  not  to  invite  the  organization  of  counter  enterprises 
which  may  destroy  their  existing  profits.  If  the  gates 
for  the  admission  of  new  competitive  capital  are  always 
open,  the  economic  effect  is  substantially  the  same  as 
if  the  new  competitor  were  already  there ;  the  fact  that 


THE  ECONOMIC  AND  SOCIAL  ASPECTS  OF  TRUSTS      2$ 

he  may  come  any  day  has  essentially  the  same  effect  as 
if  he  had  come,  because  to  Jceep  him  out  requires  the 
same  kind  of  influence  that  would  be  necessary  to 
drive  him  out.  And,  as  the  latter  always  involves 
greater  risks  than  the  former,  on  the  principle  of  self- 
interest  the  former  is  most  likel}^  to  be  adopted.^ 
There  is  really  little  to  fear,  in  this  line,  so  long  as  ar- 
bitrary barriers  are  kept  out  of  the  way,  because  in  the 
absence  of  legal  restrictions  the  active  influence  of  the 
potential  competitor  is  ever  present. 

Fourth:  The_next  charge  against  trusts  is  that, 
through  their  immense  wealth,  they  are  obtaining  an 
increasing  control  over  the  government,  and  are 
thereby  tending  to  become  not  only  industrial  mon- 
opolists but  political  dictators  also,  the  latter  being 
the  natural  consequence  of  the  former.  This  charge,  I 
think,  upon  investigation  will  also  prove  to  be  un- 
founded. Notwithstanding  the  wholesale  complaints 
that  legislation  is  all  in  their  interest,  the  statute  books 
of  the  various  states  show  no  evidence  of  this  charge. 
Instead  of  laws  being  enacted  to  grant  special  favors 
to  these  corporations,  the  books  bristle  with  enact- 
ments directed  against  them.  It  is  true  that  they  have 
lobbyists,  and  perhaps  spend  large  sums  of  money 
during  the  legislative  sessions ;  but  any  one  who  Avill 
investigate  the  matter  will  find  that  it  is  almost  invari- 
ably to  defeat  legislation  directed  against  them,  and 
not  to  enact  new  laws  in  their  favor.  They  need  no 
legislation  in  their  favor.     They  are  strong  enough, 

1  This  is  clearly  shown  in  the  history  of  the  Standard  Oil  Com- 
pany. During  the  last  ten  years  this  company  has  had  practi- 
cally no  competitor.  Still  the  price  of  oil  has  steadily  tezaded 
downwards. 


26  TRUSTS  AND   THE   PUBLIC 

by  virtue  of  their  concentrated  capital  and  improved 
methods  of  production,  to  hold  their  place  in  the 
industrial  world. 

Instead  of  growing  in  political  power  they  are  con- 
stantly becoming  politically  ostracized,  as  is  shown  by 
the  increasing  unpopularity  of  the  presidents  and  other 
prominent  officials  of  trust  companies.  Fifty  years 
ago  it  would  have  been  regarded  as  a  favor  by  the 
community  for  a  rich  manufacturer  to  accept  any 
position.  Just  in  proportion  as  this  industrial  con- 
centration and  specialization  has  developed,  the  politi- 
cal attitude  of  the  community  has  changed  towards 
capitalistic  magnates,  until  to-day  the  president  of  the 
Standard  Oil  Company,  or  of  the  Western  Union  Tele- 
graph Company,  or  of  a  railroad  syndicate,  whatever 
his  personal  qualifications,  could  hardly  be  elected  as 
a  member  of  a  board  of  aldermen.  Nor  is  there  any- 
thing unjust  in  this  attitude.  These  men  have  not 
developed  the  qualities  of  statesmanship.  They  have 
developed  simply  the  capacity  of  industrial  managers, 
and  as  such,  in  the  specialization  of  social  and  eco- 
nomic forces,  they  naturally  gravitate  to  the  field  of 
operation  where  they  are  experts.  Hence,  in  propor- 
tion as  they  become  industrial  specialists,  they  recede 
as  political  leaders.  This  is  also  shown  by  the  fact 
that  if  they  want  to  affect  legislation  they  are  com- 
pelled to  do  it  indirectly,  because  to  be  known  is  to 
be  defeated. 

But  those  who  take  this  pessimistic  view,  when 
asked  for  facts,  failing  to  find  them  in  modern  experi- 
ence, generally  point  us  to  ancient  Rome,  and  bid  us 
take  warning  of  her  fate.  They,  with  considerable 
eloquence  and  pathos,  remind  us  that  when  the  wealth 


THE  ECONOMIC  AND  SOCIAL  ASPECTS  OF  TRUSTS      2/ 

of  Kome  began  to  be  concentrated  into  a  few  bands, 
tbe  people  were  oppressed,  political  corruption  and 
private  immorality  ran  rampant,  and  intellectual, 
political  and  national  decay  set  in,  wbicb  culminated 
wdth  tbe  destruction  of  her  civilization.  To  say  tbat 
because  the  concentration  of  wealth  led  to  political 
and  national  degeneracy  in  Eome  in  the  fourth 
century,  the  concentration  of  cajpital  will  produce  the 
same  results  in  the  nineteenth  century,  is  illogical  to 
the  last  degree.  This  conclusion  is  based  upon  the 
very  common  assumption  that  all  concentration  of 
wealth  tends  to  impoverish  the  masses.  That  is  a 
fundamental  error,  which  arises  from  the  failure  to 
recognize  the  distinction  between  consumable  wealth 
and  productive  wealth. 

It  is  true  that  the  concentration  of  consumable 
•wealth  in  the  hands  of  one  class  lessens  the  amount 
available  for  the  others.  But  this  is  not  true  of  the 
concentration  of  productive  wealth  (capital),  because, 
as  I  have  already  shown,  capital  fills  no  other  function 
than  that  of  a  tool ;  hence  no  class  is  the  richer  for 
owning  capital,  except  as  they  obtain  the  consumable 
wealth  that  it  produces.  Under  Rome  it  was  the  con- 
sumable and  not  the  productive  wealth  that  was  con- 
centrated. It  is  notorious  that  nothing  was  held  in 
more  contempt  in  the  Roman  imperial  period  than 
industry.  It  is  said  that  Augustus  pronounced  the 
sentence  of  death  upon  Senator  Ovinius  for  "  having 
so  degraded  himself  as  to  engage  in  manufacture." 
Rome  was  essentially  a  military  and  not  an  industrial 
state.  She  lived  by  plunder  rather  than  production, 
and  her  wealth  was  distributed  by  authority  rather 
than  economic  law.     Hence  the  history  of  Rome,  in- 


28  TRUSTS  AND   THE   PUBLIC 

stead  of  illustrating  the  necessary  consequences  of 
present  industrial  tendencies,  shows,  rather,  what  may 
naturally  be  expected  from  the  arbitrary  manipulation 
of  industrial  affairs. 

Since  capital  is  of  no  use  to  any  one  except  as  it  pro- 
duces enjoyable  commodities,  and  since  the  capitalist 
can  obtain  no  enjoyable  commodities  as  the  result  of 
concentrated  capital  except  as  he  can  sell  its  products, 
it  follows  that  capital  can  only  be  advantageous  to  the 
cajpitalist  when  its  products  are  generally  and  liberally 
consumed  by  the  community,  and,  consequently,  the 
concentration  of  capital  is  economically  possible  only 
in  proportion  as  the  consumable  wealth  it  produces  is 
generally  distributed.  For  this  reason  the  arbitrary 
concentration  of  consumable  wealth  in  Rome  made  the 
concentration  of  productive  wealth  impossible,  and, 
conversely,  the  natural  concentration  of  productive 
wealth  to-day  makes  the  concentration  of  consumable 
wealth  impossible.  It  is  of  the  \qyj  essence  of  eco- 
nomic law  that  consumable  wealth  is  most  widely  dis- 
tributed in  proportion  as  productive  wealth  (capital)  is 
concentrated.  Thus,  by  the  same  economic  law  that 
the  social  and  political  degradation  of  the  masses  was 
increased  by  the  concentration  of  consumable  wealth 
under  Rome,  their  material  prosperity  and  political 
independence  are  promoted  by  the  concentration  of 
productive  wealth  imder  modern  industrial  institu- 
tions. 

Manifestly,  therefore,  the  charge  that  the  concentra- 
tion of  capital  in  the  form  of  trusts  and  syndicates 
necessarily  tends  to  produce  monopoly  (in.  the  obnox- 
ious sense),  destroy  competition,  increase  prices,  oppress 
labor,  or  to  put  the  government  into  the  hands  of  an 


THE  ECONOMIC  AND  SOCIAL  ASPECTS  OF  TRUSTS      29 

industrial  oligarchy,  is  without  any  real  foundation 
in  fact  or  justification  in  reason.  On  the  contrary, 
these  institutions,  instead  of  being  the  evidence  of 
industrial  abnormality  and  economic  disease,  are  the 
natural  consequence  of  modern  industrial  differentia- 
tion, and  in  their  nature  are  economically  wholesome, 
and  politically  and  socially  harmless. 

In  taking  this  view  of  the  economic  and  social  as- 
pects of  trusts,  I  do  not  assume  the  moral  sponsorship 
of  all  that  is  done  in  their  name  and  behalf.  I  am  not 
unmindful  of  the  fact  that  many  evils  have  grown  up 
with  the  development  of  these  organizations,  which 
demand  the  most  serious  consideration  and  vigorous 
treatment.  But  I  insist  that  this  is  not  an  inseparable 
part  of  these  institutions,  and  hence  that  it  is  not  nec- 
essary to  check  their  economic  development  in  order 
to  suppress  the  moral  and  social  evils  that  have  become 
associated  with  them.  The  corruption  of  the  lobby 
and  the  coercion  of  competitors  are  no  more  necessary 
to  trusts  than  venal  voters  are  to  democratic  institu- 
tions, than  mercenary  decisions  are  to  the  jury  system, 
than  blatant  demagogy  is  to  free  speech,  or  than  super- 
ficial, sensational  and  fawning  journalism  is  to  a  free 
press.  It  is  a  characteristic  feature  of  all  social  de- 
velopment that  the  advent  of  new  and  more  complex 
phenomena  always  creates  the  possibility  of  new  evils. 
And  it  is  onl}^  to  the  extent  that  these  evils  are  elimi- 
nated, without  impairing  the  good  that  any  real  prog- 
ress is  finally  assured.  To  promote  this  eliminating 
process  is  the  function  of  true  statesmanship.  In  order 
to  do  this  with  any  appreciable  success  we  must  learn 
to  recognize  the  important  but  generally  ignored  fact 
that  all  social,  political  and  moral  institutions  finally 


30  TRUSTS  AND   THE  PUBLIC 

rest  upon  and  are  adjusted  to  and  determined  bj  the 
character  of  the  great  mass  of  the  community.  It  is 
a  well  established  fact  that  business  immorality  and 
political  chicanery  are  the  most  general  where  the 
social,  intellectual  and  moral  character  of  the  masses 
is  the  lowest.  Hence  we  always  find  the  habitual  mis- 
representation of  the  quality,  quantity  and  price  of 
merchandise,  and  the  systematic  packing  of  caucuses 
and  bribing  or  coercion  of  voters,  most  prevalent  among 
the  poorest  and  most  ignorant  classes. 

Therefore,  if  we  want  to  improve  the  character  of 
congressmen,  we  must  elevate  that  of  their  constit- 
uents, and  for  the  same  reason  in  order  to  elevate  and 
purify  the  tone  of  the  press  we  must  improve  that  of 
the  readers.  The  only  way  to  prevent  the  capitalists 
from  corrupting  legislation  in  the  lobbies  is  to  increase 
the  integrity  of  the  caucus.  Those  who  buy  votes 
may  always  be  expected  to  sell  legislation.  As  the 
evils  associated  with  trusts  are  mainly  ethical  in  their 
nature,  their  elimination  should  not  be  sought  in  any 
arbitrary  limitation  of  trusts  as  industrial  institutions,^ 
but  it  should  be  sought  in  the  direction  of  a  more  per- 
fect administration  of  the  criminal  law  and  in  increas- 


iThe  present  tendency  of  legislation  is  strongly  in  that  direc- 
tion. Since  writing  the  above  I  have  received  the  full  text  of  a 
bill  recently  introduced  into  congress  proposing  to  levy  a  tax  of 
40  per  cent  on  the  products  of  tx'usts.  This  measure,  which  is 
characteristic  of  all  the  proposed  legislation  upon  the  subject,  is 
essentially  uneconomic  in  character.  Instead  of  tending  to 
eliminate  the  bad  features  of  trusts  without  impairing  the  good, 
it  would  produce  the  opposite  effect.  If  it  did  not  make  the 
development  of  large  enterprises  impossible  it  would  destroy 
their  economic  advantages  by  making  their  products  40  per  cent, 
dearer  to  the  public. 


THE  ECONOMIC  AND  SOCIAL  ASPECTS  OF  TRUSTS      3 1 

ing  the  influences  wliich  tend  to  improve  ttie  social 
condition  and  develop  the  intellectual  and  moral 
character  of  the  great  mass  of  the  people,  v\'ho  con- 
stitute the  only  power  that  can  make  such  evils  im- 
possible. It  must  not  be  inferred,  however,  that  the 
economic  phase  of  trusts  and  similar  organizations  is 
necessarily  outside  the  pale  of  state  action.  But  if  the 
community  is  to  secure  the  best  economic  results  from 
the  use  of  capital  and  obtain  the  maximum  production 
at  lowest  prices,  the  state  should  promote  rather  than 
restrict  the  free  movement  and  safe  concentration  of 
capital  in  productive  enterprise.  One  of  the  ways  in 
which  the  state  can.  render  efficient  service  in  this 
regard,  without  interfering  in  any  "way  with  the 
freedom  of  capital,  w^ould  be  to  furnish  frequent, 
reliable  statistics  as  to  the  cost  of  production,  including 
that  of  raw  material,  wages  and  transportation,  and 
also  the  selling  price  of  the  product  in  large  industries. 
With  such  statistics,  scientifically  collected  and  author- 
itatively presented,  whenever  abnormal  profits  existed 
in  any  industry  the  fact  would  be  generally  known ; 
and  idle  and  less  remunerative  capital  V70uld  at  once 
move  in  that  direction.  By  this  means  the  mobility 
and  consequently  the  competitive  influence  of  capital 
would  be  greatly  increased,  and  the  full  benefits  of 
large  enterprises  and  improved  methods  of  production 
would  be  secured  to  the  community  by  the  necessarily 
minimized  prices  and  profits. 


n. 

THE  ECONOMIC  EREOKS  OF  TRUSTS  * 

It  has  been  well  said  that  there  is  generally  "  a  soul 
of  truth  in  things  erroneous."  When  historically 
investigated,  the  crudest  theological,  political,  and 
economic  superstitions  are  generally  found  to  have  had 
their  rise  in  some  actual  experience.  The  public  gen- 
erally misunderstands  and  often  exaggerates  social 
facts,  but  it  seldom  invents  them.  Whenever  public 
sentiment  turns  against  established  institutions,  "we 
may  be  sure  that  it  is  not  entirely  without  cause,  how- 
ever irrational  the  proposed  remedies  may  be.  What 
then  is  the  cause  of  this  popular  antagonism  to  trusts  ? 
Is  it  due  to  some  peculiarity  inherent  in  this  form  of 
industrial  organization,  or  does  it  arise  from  erroneous 
ideas  of  administration  ?  In  short,  are  trusts  a  legiti- 
mate form  of  economic  development,  or  are  they 
simply  a  form  of  monopoly  superimposed  upon  society  ? 

Many  people  talk  about  trusts  as  if  they  were  a 
sudden  creation,  the  product  of  a  conspiracy  against 
the  public.  Nothing  could  be  farther  from  the  truth 
than  this  view.  The  history  of  trusts  is  simply  the 
history  of  the  continuous  and  almost  imperceptible 
tendency  in  progressive  society  toward  a  greater 
centralization  of  capital  which  the  most  highly  devel- 
oped labor-saving  methods  of  production  make  neces- 

*  Published  in  the  Social  Economist  of  February  1893. 
32 


THE   ECONOMIC  ERRORS   OF  TRUSTS  33 

sary.  The  impeachment  of  trusts  as  economic  institu- 
tions is  therefore  the  impeachment  of  the  concentra- 
tion of  capital,  without  which,  it  is  needless  to  say, 
our  great  railroad,  telegraph,  and  factory  systems 
would  have  been  impossible.  Very  few  of  the 
industries  which  use  the  most  approved  methods  and 
have  contributed  most  to  cheapening  the  multitude  of 
products  can  now  be  conducted  with  a  capital  of  less 
than  a  million  dollars ;  many  of  them  require  tens  and 
even  hundreds  of  millions.  Such  large  capitals  would 
be  absolutely  impossible  without  the  cooperation  of 
the  great  capitalists.  If  the  evil  lies  in  the  amount  of 
capital  aggregated  in  a  single  concern,  then  what  shall 
the  limit  be  ?  If  a  hundred  million  is  dangerous,  why 
not  fifty  million  ?  And  if  fifty,  why  not  twenty-five, 
or  ten,  or  even  one  ?  A  hundred  or  even  fifty  years 
ago,  a  millionaire  might  have  been  regarded  with  as 
much  apprehension  as  is  a  hundred-millionaire  to-day ; 
indeed,  he  would  have  sustained  about  the  same 
relation  to  the  productive  needs  and  methods  of  the 
community.  The  truth  is  that  in  this  case,  as  in  the 
growth  of  all  social  institutions,  the  new  form  came 
because  it  was  necessary.  The  small  English  water- 
wheel  factory  on  the  river  bank,  in  the  eighteenth 
century,  came  because  the  isolated  hand-loom  and 
spinning-wheel  did  not  permit  the  utilization  of  the 
most  economic  methods  after  the  spinning-jenny  and 
spinning-frame  were  invented.  The  steam-driven  fac- 
tory in  thickly  populated  centers  came  in  the  first 
quarter  of  the  nineteenth  century  because  the  water- 
wheel  shops  were  incapable  of  employing  the  best 
methods  after  the  invention  of  steam  and  the  power- 
loom  had  been   completed.     If   these  had  not  been 


34  TRUSTS  AND   THE   PUBLIC 

capable  of  lessening  the  cost  of  production  and  so 
rendering  a  general  benefit  to  the  community,  they 
could  not  have  succeeded,  as  there  would  have  been  no 
demand  for  their  products.  So,  again,  by  the  middle 
of  the  century,  when  machinery  had  been  still  further 
improved,  partnership  organization  of  industry  became 
necessary  because  single  individuals  were  not  rich 
enough  to  furnish  plants  sufficiently  large  to  employ 
profitably  the  most  improved  methods. 

With  the  cheapening  of  products  and  the  increased 
consumption  which  followed  the  use  of  these  succes- 
sive improvements,  and  the  consequent  social  advance 
of  the  community,  a  revolution  in  the  methods  of  dis- 
tribution and  international  communication  became 
necessary.  Inventions  multiplied,  which  so  enlarged 
the  industrial  world  as  to  render  corporations  neces- 
sary in  order  to  obtain  the  best  economic  results. 
Modern  trusts  are  but  a  single  step  farther  in  the  same 
direction.  They  are  simply  the  organization  of  cor- 
porations, in  the  same  way  that  corporations  were  the 
organization  of  individual  capitalists. 

Trusts,  instead  of  being  sudden  monopolistic  crea- 
tions that  have  been  sprung  on  the  community  by  a  few 
designing  conspirators,  are  but  the  last  link  in  an  in- 
dustrial chain  more  than  a  century  long ;  they  are  no 
more  revolutionary  than  any  one  of  the  previous  links, 
and  less  so  than  some  of  the  earlier  ones.  Each  one  of 
these  links  in  the  great  chain  of  industrial  evolution 
came  and  stayed  only  because  it  was  more  profitable 
than  its  predecessors  to  those  who  employed  it ;  les- 
sened the  cost  of  production  and  served  the  community 
more  cheaply.  Had  it  not  done  this,  it  could  not  have 
sustained  itself  in  competition  with  the  old  methods. 


THE  ECONOMIC   ERRORS  OF  TRUSTS  35 

That  the  concentration  of  capital  is  necessary  to  the 
employment  of  the  best  methods  in  modern  industry  is 
too  obvious  to  need  discussion.  Those  Avho  controvert 
this  position  may  be  passed  by  as  unqualified  scientifi- 
cally to  discuss  the  subject.  Every  labor-saving  and 
price-reducing  improvement  now  in  use  has  involved 
concentration  of  capital  in  some  form  ;  in  fact,  the 
history  of  the  economic  progress  of  the  present  cen- 
tury is  the  history  of  the  concentration  of  productive 
capital.  To  decentralize  capital  is  to  barbarize  society. 
The  general  proposition  of  the  economic  necessity  of 
the  centralization  of  capital,  therefore,  may  be  regarded 
as  self-evident. 

Like  all  other  institutions  in  society,  trusts  must  be 
judged  by  their  service  to  the  community.  Do  they 
serve  the  public  cheaper  and  better  than  did  smaller 
organizations  ?  If  they  do  not,  the  community  has  no 
use  for  them.  In  considering  this  question,  however, 
Tve  must  distinguish  the  spurious  from  the  genuine, 
and  not  make  economic  trusts  responsible  for  the  do- 
ings of  merely  uneconomic  speculative  combinations. 
One  of  the  chief  objections  urged  against  trusts  is  that 
they  are  monopolies.  Now,  we  must  beware  of  attach- 
ing too  much  importance  to  this  charge.  The  cry 
"  Monopoly  "  is  very  likely  to  be  raised  against  the  suc- 
cessful by  those  who  fail.  With  this  calling  of  names 
the  community  has  no  concern  ;  it  is  interested  only  in 
the  economic  result.  This  will  depend  mainly  upon  the 
manner  in  which  the  so-called  monopoly  is  acquired. 
If  it  is  acquired  through  special  legislation,  by  which 
competitors  can  be  excluded  and  prices  arbitrarily  con- 
trolled, it  will  be  monopoly  in  the  objectionable  sense. 
On  the  other  hand,  if  the  control  of  the  market  is 


36  TRUSTS  AND   THE   PUBLIC 

obtained  by  furnishing  better  and  cheaper  goods,  it  is 
clearly  an  advantage  to  the  consuming  public.  Now, 
the  great  successful  trusts  have  not  relied  upon  special 
legislation  ;  on  the  contrary,  they  frequently  have  been 
obliged  to  spend  large  sums  of  money  to  prevent  them- 
selves from  being  handicapped  by  discriminating  legis- 
lation. Indeed,  it  is  true  that,  encouraged  by  the 
prevalent  antagonism  to  large  capitalists,  mushroom 
statesmen  have  made  it  a  too  common  practice  to  con- 
coct threatening  legislative  measures,  which  they  never 
expect  to  have  passed,  for  the  purpose  of  exacting 
tribute  from  railroad  and  other  corporations.  Of  this 
practice  the  Union  Pacific  and  the  Broadway  railroad 
are  conspicuous  victims. 

Trusts  have  obtained  their  industrial  supremacy 
either  by  improving  the  quality  or  lowering  the  price 
of  the  commodities  they  furnish.  Of  course,  one 
result  of  the  success  of  the  larger  organizations  is  that 
smaller  and  inferior  competitors  are  either  absorbed 
by  them  or  driven  from  the  field.  But  to  this  no  valid 
objection  can  be  urged.  Those  w^ho  best  serve  the 
community  are  entitled  to  the  community's  support ; 
otherwise  there  could  be  no  lowering  of  prices,  and  we 
should  still  be  handicapped  by  the  high  cost  and  poor 
service  of  the  hand-loom  and  stage-coach  methods 
such  as  Kussia  now  enjoys.  Therefore,  to  complain 
because  those  who  produce  most  cheaply  obtain  su- 
premacy is  to  complain  of  the  advance  of  civilization. 

That  the  great  trusts  have  obtained  their  supremacy 
through  their  economic  superiority  is  completely  dem- 
onstrated in  the  history  of  the  Standard  Oil  Company, 
the  AVestern  Union  Telegraph  Company,  and  our 
great  railway  systems.    The  price  of  petroleum,  for 


THE  ECONOMIC   ERRORS   OF  TRUSTS  37 

instance,  has  not  only  been  greatly  reduced  since  the 
trust  was  organized,  but  the  quality  of  the  oil  has  been 
immensely  improved.  When  petroleum  was  produced 
by  small  companies,  and  cost  four  times  its  present 
price,  its  quality  was  such  as  to  render  its  use  highly 
dangerous.  The  daily  papers  always  reported,  among 
the  casualties,  a  number  of  accidents  from  lamp  ex- 
plosions. At  an  immense  expense  the  trust  has  almost 
entirely  eliminated  the  explosive  element,  and  at  the 
same  time  has  improved  the  illuminating  quality  of  the 
oil  and  reduced  the  price  about  thirty  per  cent.  More- 
over, by  the  introduction  of  new  processes  this  trust 
has  developed  methods  for  manufacturing  several  new 
products  from  what  has  hitherto  been  refuse,  with 
only  a  fuel  value.  From  this  waste  is  now  manufac- 
tured naphtha,  lubricating  oil,  paraffine  Avax,  etc.,  and 
the  price  to  the  public  in  each  case  has  been  greatly 
lowered.  For  example,  the  price  of  paraffine  oil  has 
been  reduced  from  22  cents  to  about  11  cents  a  gallon, 
and  has  been  improved  over  50  per  cent,  in  its  lu- 
bricating qualities.  In  1875  the  standard  for  American 
paraffine  oil  by  the  commercial  test,  viscosity,  was  100 
seconds  at  the  temperature  of  TO  ;  it  now  tests  150,  and 
its  flash  point,  which  in  1875  w\is  300,  is  now  380. 

In  1875  paraffine  oil  could  not  be  used  for  lubricat- 
ing machinery  without  the  admixture  of  from  20  to  50 
per  cent,  of  animal  oil ;  it  can  now  be  used  without 
any  animal  oil.  This  is  true  of  several  lubricants  made 
from  petroleum,  especially  cylinder  oil,  which,  even 
for  railroad  purposes,  has  superseded  tallow  and  other 
animal  lubricants.  Again,  in  1875  the  price  of  petro- 
leum cylinder  oil  was  $1.25  a  gallon  ;  it  is  now  less  than 
40  cents.     The  price  of  black  lubricating  oil  used  for 

/a  *^  ,'^  v^.  #>  r~ 


38  TRUSTS  AND   THE   PUBLIC 

railroad  axles  was  from  15  to  18  cents  a  gallon  in  1875  ; 
it  is  now  sold  at  from  7  to  9  cents.  The  production 
of  paraffine  wax  since  1870  has  been  increased  from 
6,000  to  over  20,000  tons  a  year,  and  the  price  has 
been  reduced  from  9  to  5  cents  a  pound.  The  manu- 
facture of  these  by-products  has  involved  the  use  of 
large  quantities  of  sulphuric  acid,  which  the  trust  de- 
cided to  manufacture  for  its  own  use,  and,  through 
improved  processes,  has  reduced  its  price  from  1^  cents 
a  pound  to  8  cents  a  hundred  pounds.  It  has  thus  not 
only  greatly  reduced  the  price  of  its  main  product  but  it 
has  converted  mere  waste  into  numerous  by-products 
every  one  of  which  has  been  greatly  improved  in  quality 
and  lowered  in  price.  The  cost  of  cotton-seed  oil, 
sugar,  and  the  transportation  and  telegraph  service, 
under  the  control  of  the  most  conspicuous  trusts  and 
combinations,  has  fallen  in   a  similar  ratio. 

There  has  indeed  been  a  general  cheapening  of  com- 
modities during  the  last  fifty  years,  but  facts  every- 
where show  that  the  fall  in  prices  has  been  greatest  in 
those  industries  where  capital  is  most  concentrated ; 
for  instance,  articles  produced  by  hand-labor  are  not 
cheaper,  but  in  most  cases  dearer,  than  they  were  half 
a  century  ago,— witness  art-engraving,  sculpture,  wood 
and  stone  carving,  brick-laying,  mason-work,  etc. ;  and, 
with  the  exception  of  wheat  and  a  few  other  articles 
the  price  of  farm,  garden,  and  dairy  products  is  higher 
now  than  in  the  first  quarter  of  the  century.  It  is  in 
manufactured  products  that  the  great  reduction  in 
price  has  taken  place.  This  is  because  in  manufactur- 
ing industries  only  have  large  capitals  and  labor-sav- 
ing machinery  been  employed.  The  reason  the  jjrice 
of  hand-labor  products  has  increased  is  that  wages 


THE  ECONOMIC  ERRORS  OF  TRUSTS  39 

have  risen  with  the  general  rise  of  civilization,  and 
none  of  the  labor  has  been  saved  by  the  use  of  ma- 
chinery. In  agricultural  industries  machinery  has  been 
introduced  only  to  a  limited  extent,  and  hence  has  not 
lessened  the  cost  of  production  perceptibly  more  than 
the  rise  of  wages  has  increased  it ;  and  agricultural 
prices  have  remained  practically  static.  In  manufac- 
turing, through  the  extensive  use  of  capital,  the  cost 
of  production  has  been  reduced  by  improved  machinery 
very  much  more  than  it  has  been  increased  by  the  rise 
in  wages,  hence  the  marked  lowering  of  prices.  This 
distinction  is  equally  marked  in  different  lines  of  manu- 
facture, the  economy  in  production  and  the  fall  of 
prices  being  greatest  where  the  largest  capitals  and 
best  methods  are  employed.  ]^othiug  better  measures 
the  real  cheapening  of  products  than  the  purchasing 
power  of  daily  wages.  We  have  elsewhere  ^  furnished 
statistics  of  wages  and  prices  which  show  that  from  1860 
to  1885  the  purchasing  power,  in  two  hundred  staple 
articles,  of  the  average  weekly  wages  in  twenty  mechan- 
ical industries  increased  a  little  over  fifty  per  cent. 
Applying  the  same  test  to  the  production  of  cotton-seed 
oil,  petroleum,  and  sugar,  and  to  railroad  and  telegraph 
service,  which  are  in  the  hands  of  the  largest  combina- 
tions, we  find  that  from  1860  to  1890  the  average  pur- 
chasing power  of  the  same  wages  was  increased  236  per 
cent.,  or  more  than  four  times  as  much  as  those  of  the 
non-trust  corporations,  as  shown  in  the  following  table. 
Judged  by  the  standard  of  eflBciency  of  service  and 
cheapness  of  product,  as  here  shown,  trusts  are  mani- 
festly a  superior  form  of  industrial  organization  : 

1  Principles  of  Social  Economics,  p.  408. 


40 


TRUSTS  AND   THE   PUBLIC 


Purchasing  power  of 
weekly  wages  in 

I860 

1890 

Percentage 
of  increase 

Cotton-seed  oil 

Suo'ar  refined 

18.02  gals. 
90.09  lbs. 

530.00    " 
654.00     " 
822.00     '« 
1309.00     " 
8.25     " 
107.89     " 

29.93  gals. 
152.00  lbs. 

1317.00    " 
1530.00     " 
1976.00     " 
2822.00     " 
31.66     " 
1086.89     " 

66 
67 

Freight,  New  York  to 
Chicago : 
First  class 

148 

Second  class 

Third  class 

Fovirth  class 

Telegraph  messages  . . 
Petroleum,  refined  . . . 

133 
176 

115 

283 
907 

Average  percentage  of  increase. 


.236 


Of  course,  all  trusts  have  not  made  so  good  a  show- 
ing as  these,  which  we  have  cited  because  they  are 
among  the  oldest  and  largest  concerns  of  their  kind, 
and  are,  moreover,  legitimate  economic  organizations. 
Their  success  demonstrates  the  correctness  of  the  prin- 
ciple of  capitalistic  concentration,  and  shows  that  prop- 
erly conducted  trusts  are  truly  beneficial  to  society. 
There  are  economic  and  uneconomic  trusts,  just  as 
there  are  the  genuine  and  the  spurious  in  every  walk  of 
life.  Economic  trusts  are  those  which,  like  the  Stand- 
ard Oil  Company,  the  Western  Union  Telegraph  Com- 
pany, the  American  Sugar  Refining  Company,  and 
the  great  railroad  systems,  have  used  their  consolidated 
capital  to  acquire  profits  through  economies  in  pro- 
duction, and  have  shared  the  gain  with  the  community 
by  giving  lower  prices  and  better  service.  All  such 
contribute  to  the  permanent  improvement  of  society. 

There  are  combinations,  however,  that  have  as- 
sumed the  name  without  the  virtue,  and  have  used 
their  organization  to  benefit  their  promoters  at  the  ex- 
pense of  the  public.  Although  it  is  true  that  this  stand- 
and-deliver  method  cannot  succeed  permanently,  it  can 


THE   ECONOMIC   ERRORS   OF   TRUSTS  4I 

and  does  inflict  injury  for  a  time.  Such  is  the  history 
of  "  corners."  Several  so-called  trusts  have  endeavored 
to  employ  this  method,  conspicuously  the  copper  trust, 
which,  instead  of  trying  to  increase  its  profits  by  im- 
proving the  methods  of  producing  copper,  has  tried  to 
lock  up  the  copper  of  all  the  world,  and  then  to  exact 
exorbitant  prices  or  to  deprive  the  community  of  the 
use  of  the  metal.  But,  like  Keene  Avith  his  w^heat 
corner,  and  the  Panama  conspiracy  it  overreached  its 
mark  and  collapsed,  bringing  ruin  in  its  fall  to  many 
of  its  projectors.  Several  other  combinations  have 
tried  to  do  substantially  the  same  thing  on  a  smaller 
scale. 

It  is  this  uneconomic  use  of  large  capitals,  this  at- 
tempt of  a  few  industrial  pirates  to  exact  large  profits 
from  the  community  by  raising  prices,  that  has  brought 
trusts  into  general  disrepute.  Of  course,  it  would  be 
absurd  to  condemn  legitimate  industrial  organizations 
for  the  misconduct  of  uneconomic  combinations ; 
nevertheless,  it  should  be  remembered  that  public 
opinion  is  not  discriminating ;  it  is  likely  to  judge  a 
class  by  its  known  specimens,  and  is  much  more  likely 
to  remember  those  who  injure  than  those  who  benefit. 
The  prevalent  feeling  against  capitalists  in  general  is 
encouraged  by  the  direct  abuse  of  successful  business 
men  by  political  editors,  reflected  and  intensified  in 
the  fairyland  socialism  portraj^ed  by  all  grades  of 
fiction  writers  from  Bellamy  to  Howells.  Strictly 
speaking,  therefore,  although  much  of  the  opposition 
to  trusts  in  particular  and  to  capital  in  general  is 
irrational,  it  has  really  been  created  by  the  uneconomic 
conduct  of  capitalists  themselves.  The  chief  reason 
for  this  is  that  capitalists,  like  laborers,  are  ignorant 


42  TRUSTS   AND   THE  PUBLIC 

of  the  subject  of  industrial  economics.  For  the  same 
reason  that  they  mistakenly  believe  in  cheap-labor  pro- 
duction, they  delude  themselves  with  the  idea  that 
they  can  establish  a  profitable  business  by  imposing 
upon  the  community  ;  consequently  they  have  suc- 
ceeded in  arousing  the  hostility  of  both  laborers  and 
the  general  public.  A  little  more  in  this  direction,  and 
they  will  be  handicapped  by  a  network  of  socialistic, 
restrictive  legislation.  The  political  atmosphere  is 
already  surcharged  with  threatening  rumors.  The 
Sherman  anti-trust  law  and  the  various  laws  against 
trusts,  under  which  the  Standard  Oil  trust  has  been 
forced  to  disband,  foreshadow  what  is  likely  to  come. 
Schemes  for  graduated  taxation  of  incomes,  to  con- 
fiscate large  f  ortimes  and  make  millionaires  impossible, 
are  being  seriously  considered  by  politicians,  who,  be 
it  remembered,  always  stand  ready  to  do  whatever 
the  people,  wisely  or  unwisely,  desire  to  have  done. 
This  would  be  a  serious  blow  to  industrial  progress, 
and  it  would  be  a  blow  from  which  large  capitalists 
would  suffer  most. 

The  true  remedy  for  the  existing  hostility  to  trusts 
and  large  organizations  is  in  the  hands  of  capitalists 
themselves.  If  they  would  disarm  popular  opposition, 
they  must  avoid  furnishing  superficial  revolutionists 
with  an  excuse  for  creating  public  opinion  against 
them  by  refusing  all  aid,  either  of  money  or  influence, 
to  uneconomic  enterprises.  If  our  great  capitalists 
w^ould  resolutely  take  this  high  economic  position,  the 
smaller  ones  would  be  compelled  to  do  likewise,  and 
the  present  universal  distrust  of  capitalistic  movement 
would  soon  be  superseded  by  universal  confidence.  It 
is  to  be  hoped  that  the  piano  and  typewriter  trusts 


THE   ECONOMIC  ERRORS   OF  TRUSTS  43 

now  forming  and  other  projected  combinations  will  act 
upon  this  principle,  and  thus  help  to  create  public  con- 
fidence in  the  progress  of  our  present  industrial  sys- 
tem, instead  of  furnishing  additional  arguments  for  its 
destruction. 

The  error  of  trusts,  then,  is  not  the  extent  of  their 
concentration  of  capital  or  their  industrial  supremacy ; 
it  is  their  failure  to  recognize  the  economic  law  of 
their  existence,  namely,  that  an  increased  concentration 
of  capital  and  commercial  power  in  feioer  hands  is  justi- 
fiable only  on  the  condition  of  improved  service  to  the 
community,  either  in  hetter  quality  or  lower  price  of 
what  is  furnished.  Profits  are  the  legitimate  reward 
of  capitalistic  enterprise,  but  they  must  be  obtained  by 
exploiting  nature  through  improved  methods,  not  by 
exploiting  the  community  through  higher  prices.  If 
capitalists  imagine  that  any  amount  of  accumulated 
wealth  can  enable  them  to  def}^  this  essential  condition, 
they  are  wofuUy  mistaken,  and  sooner  or  later  they 
will  have  to  pay  the  penalty,  either  by  arrest  of  their 
progress  or  by  entire  dispossession  of  their  present 
industrial  opportunities. 


III. 

INTEGEITY  OF  E;C0N0MIC  LITERATURE* 

Public  opinion,  like  public  taste,  appears  periodically 
to  run  mad  on  special  topics.  The  subject  upon  which 
popular  madness  is  most  pronounced  at  present  is  ac- 
cumulated capital.  The  chief  characteristic  of  the  last 
half  century's  industrial  development  has  been  the  con- 
centration of  productive  processes,  the  aggregation,  of 
large  capital,  and  consequently  the  appearance  of 
millionaire  capitalists. 

^Notwithstanding  that  these  large  fortunes  are  chiefly 
invested  in  productive  enterprises,  earning  profit  only 
when  they  are  working  for  the  public  by  cheapening 
wealth,  the  fact  that  the  large  concerns  succeed,  while 
small  ones  decline,  has  given  rise  to  the  tacit  assump- 
tion that  large  capital  necessarily  implies  business  dis- 
honesty and  public  disadvantage  for  private  gain. 
There  is  a  certain  naturalness  in  this  feeling,  since 
those  who  fail  are  ever  prone  to  ascribe  their  failures 
to  somebody  else  rather  than  to  themselves.  It  was 
this  feeling  that  inspired  the  hand-loom  weavers  in  the 
beginning  of  the  century  to  organize  mobs  to  smash 
the  power-looms.  The  small  manufacturers  assumed 
the  same  injured  attitude  towards  corporations.  Small 
farmers  have  the  same  dislike  of  large  farmers.  And 
under  the  same  notion,  trade  unionists  have  ever  op- 
posed new  inventions. 

*  Published  in  the  Social  Economist  of  July  1895. 
44 


INTEGRITY  OF  ECONOMIC   LITERATURE  45 

This  feeling  has  been  made  a  basis  of  a  general  doc- 
trine that  profits  are  robbery,  and  hence  that  large 
capitalists  are  social  robbers.  The  advocates  of  social- 
ism, populism,  single -tax  nationalism,  and  free  trade 
have  all  tried  to  make  headway  by  appealing  to  and 
inflaming  this  sentiment.  Iconoclastic  propagandas  on 
these  lines  have  been  so  successful  that  to  attack  mil- 
lionaire capitalists  is  now  something  of  a  fad.  Under 
the  influence  of  this  prejudice  against  capital,  dema- 
gogical misrepresentation  is  easily  palmed  off  for  honest 
statement  and  interest  in  public  welfare,  undermining 
the  integrity  of  economic  literature. 

The  latest  and  worst  specimen  of  this  class  of  litera- 
ture is  "  "Wealth  Against  Commonwealth,"  by  Mr. 
Henry  D.  Lloyd  of  Chicago.  This  is  a  book  of  over 
five  hundred  pages,  purporting  to  expose  the  dishonest 
means  by  which  large  corporations  have  crushed  honest 
business  men  and  defrauded  the  public.  The  real  aim 
of  the  book,  however,  is  to  traduce  the  Standard  Oil 
Company.  Mr.  Lloyd  makes  great  show  of  getting 
his  facts  from  official  reports  of  legislative  investiga- 
tions and  court  proceedings,  to  which  he  makes  fre- 
quent reference  in  foot-notes.  This  gives  the  book  a 
seeming  authority,  and  the  writer's  frequent  outbursts 
of  patriotic  sentiment  lend  to  it  a  color  of  sincerity 
and  public  interest.  This  apparent  genuineness  is 
further  enhanced  by  a  very  liberal  use  of  quotation 
marks,  together  with  the  fact  that  the  book  bears  the 
imprint  of  such  a  reputable  house  as  Harper  Bros.  On 
the  assumption  that  a  respectable  publisher  and  aver- 
age literary  integrity  are  proof  against  deliberate  mis- 
representation, several  high-minded  journals  have  hailed 
it  as  an  important  contribution  to  economic  literature. 


46  TRUSTS  AND  THE  PUBLIC 

As  an  instance  of  this,  The  Outlook^  edited  by  tlie 
Rev.  Dr.  Lj^nian  Abbott,  who  is  preeminently  zealous 
in  the  work  of  moral  reform  though  somewhat  ragged 
on  economics,  introduces  "  Wealth  Against  Common- 
wealth "  to  its  readers  with  the  statement  that  it  "  is 
the  most  powerful  book  on  economics  that  has  appeared 
in  this  country  since  Henry  George's  '  Progress  and 
Poverty,'  ....  The  real  greatness  of  Mr.  Lloyd's 
work  lies  in  its  clear  massing  of  evidence  unearthed 
from  the  records  of  courts  and  official  investigations, 
proving  to  the  most  sceptical  the  enormity  and  persist- 
ency of  the  criminal  operations  by  which  the  wealth 
of  the  Standard  Oil  Company  has  been  amassed.  It 
is  the  plain,  straightforward  recital  of  these  facts  which 
brings  conviction  and  arouses  indignation." 

After  a  column  of  this  kind  of  preface,  Dr.  Abbott 
says :  "  To  indicate  its  character,  it  is  better  for  us  to 
summarize  a  chapter  than  to  summarize  the  book.  In 
reading,  for  example,  the  story  of  George  Rice,  we  are 
more  impressed  with  the  meaning  of  rebates  than  when 
we  are  told  the  Pennsylvania  Railroad  paid  in  this 
way  more  than  a  million  a  year  into  the  treasury  of 
the  Standard  Oil  Company  ; "  and  then  he  prints  the 
greater  part  of  one  of  Mr.  Lloyd's  three  chapters 
devoted  to  Mr.  Rice's  experience  in  refining  oil  at 
Marietta,  Ohio,  and,  as  might  be  expected,  concludes 
by  declaring :  "  The  remedy  for  the  evils  plainly  lies, 
not  in  the  public  control  of  oil  refineries,  but  in  the 
public  control  of  the  public  highways." 

Dr.  Abbott  is  perfectly  right  in  regarding  this 
blood-curdling  chapter  as  typical  of  the  whole  book. 
It  is  indeed  typical  in  its  inflammatory  style  ;  its  violent 
misrepresentation  through  garbled  statenients  in  quota- 


INTEGRITY  OF  ECONOMIC  LITERATURE  47 

tion  marks  ;  and  the  utter  suppression  of  evidence  on 
the  other  side.  We  have  taken  the  pains  to  go  through 
the  public  documents  referred  to  in  this  book,  and  it 
may  be  said  that  there  is  scarcely  an  honest  quotation 
in  it.  Indeed,  there  seems  to  be  as  much  downright 
dishonesty  in  the  quotations  from  public  documents 
and  display  of  foot-notes  as  there  is  demagogy  in  the 
high-wrought  and  indignant  perorations.  The  dis- 
honest}''  does  not  consist  in  misquotations  but  in  partial 
and  unfair  quotations  and  in  always  quoting  from  the 
testimony  of  those  against  the  Standard  Oil  Company 
to  the  utter  suppression  of  all  rebuttal. 

It  is  just  about  as  fair  and  honest  as  it  "would  be  for 
an  author  to  write  a  book  on  the  American  tariff  and 
take  all  his  evidence  from  the  speeches  of  the  demo- 
crats in  the  last  (53d)  congress.  He  would  get  plenty 
of  testimony  against  the  tariff,  but  it  would  be  made 
up,  for  the  most  part,  of  reckless  and  unscrupulous 
statements — partly  true  and  largely  false,  and  always 
unreliable — inspired  chiefly  by  party  hatred,  political 
ambition  and  personal  interest.  This  is  exactly  the 
character  of  much  of  the  evidence  given  before  political 
investigating  committees.  The  greater  part  of  the 
testimony  against  the  Standard  Oil  Company  is  given 
by  persons  who  failed  through  being  unable  to  com- 
pete with  the  Standard  and  were,  in  fact,  in  the  posi- 
tion of  complainants. 

While  the  testimony  from  both  sides  was  taken  by 
the  commission,  Mr.  Lloyd  quotes  from  the  testimony 
of  the  complainant  and  never  from  that  of  the  defend- 
ant, as  if  the  statements  of  complainants  were  always 
the  verified  and  undisputed  truth  in  the  case.  Wher- 
ever in  cases  of  litigation  the  decision  of  th©  court  was 


48  TRUSTS  AND   THE   PUBLIC 

in  favor  of  the  Standard,  he  assumes  without  any 
evidence  whatever  that  the  verdict  was  due  to  a  corrupt 
court  purchased  by  the  Standard  Oil  Company.  There 
is  throughout  the  book  great  vigor  of  statement, 
apparent  earnestness  of  purpose,  and  an  intense,  lurid 
high-wrought  style  with  an  utter  absence  of  the  spirit 
of  fairness  and  of  literary  and  economic  integrity. 
Between  the  lines  and  on  the  lines,  the  book  bears  all 
the  marks  of  the  special  pleader  who  is  more  intent  on 
winning  his  case  than  on  telling  the  truth  or  promoting 
a  public  reform.  A  few  instances  will  suffice  to  show 
the  character  of  the  book. 

After  devoting  less  than  forty  pages  to  other  trusts, 
to  give  a  pretense  of  general  discussion  of  the  subject, 
be  begins  his  attack  upon  the  Standard  Oil  Company 
by  describing  the  character  and  organization  of  the 
"  South  Improvement  Company."     He  says  (p.  46) : 

"  By  this  contract  the  railroads  had  agreed  with  this  company 
of  citizens  as  follows  : 

1.  To  double  freight  rates. 

2.  Not  to  charge  them  the  increase, 

3.  To  give  them  the  increase  collected  from  all  competitors. 

4.  To  make  any  other  changes  of  rates  necessary  to  guarantee 
their  success  in  business. 

5.  To  destroy  their  competitors  by  high  freight  rates. 

6.  To  spy  out  the  details  of  their  competitors'  business. 

The  increase  in  rates  in  some  cases  was  to  be  more  than  double. 
These  higher  rates  were  to  be  ostensibly  charged  to  all  shippers, 
including  the  thirteen  members  of  the  South  Improvement  Com- 
pany ;  but  that  fraternity  only  did  not  have  to  pay  them  j-early. 
All,  or  nearly  all,  the  increase  it  jsaid  was  to  be  paid  back  again 
— a  "rebate."  The  increase  paid  by  everyone  else — "on  all 
transported  by  other  parties  " — was  not  paid  back.  It  was  to  be 
kept,  but  not  by  the  railroads.  These  were  to  hand  that,  too, 
over  to  the  South  Improvement  Company. 

This  secret  arrangement  made  the  actual  rate  of  the  South  Im- 


INTEGRITY   OF  ECONOMIC   LITERATURE  49 

provement  Company  much  lower,  sometimes  half,  sometimes  less 
than  half,  what  all  others  paid.  The  railroad  officials  were  not 
to  collect  these  enhanced  freight  rates  from  the  unsuspecting 
subjects  of  his  "contract"  to  turn  them  into  the  treasury  of 
the  railroads.  They  were  to  give  them  over  to  the  gentlemen 
who  called  themselves  "  South  Improvement  Company."  The 
"principle"  was  that  the  railroad  was  not  to  get  the  benefit 
of  the  additional  charge  it  made  to  the  people.  No  matter  how 
high  the  railroads  put  the  rates  to  the  community,  not  the  rail- 
road but  the  improvement  company  was  to  get  the  gain.  The 
railroads  bound  themselves  to  charge  everyone  else  the  highest 
nominal  rates  mentioned.  "  They  shall  not  be  less,"  was  the 
stipulation.  They  might  be  more  up  to  any  point ;  but  less  they 
must  not  be. 

The  rate  for  carrying  petroleum  to  Cleveland  to  be  refined  was 
to  be  advanced,  for  instance,  to  80  cents  a  barrel.  When  paid 
by  the  South  Improvement  Company,  40  cents  of  the  80  were  to 
be  refunded  to  it ;  when  paid  by  anyone  else,  the  40  cents  were 
not  merely  not  to  be  refunded,  but  to  be  paid  over  to  his  com- 
petitor, this  aspiring  self -improvement  company.  The  chai'ge  on 
refined  oil  to  Boston  was  increased  to  $3.07;  and,  in  the  same 
way,  the  South  Improvement  Company  was  to  get  back  a  rebate 
of  $1.32  on  every  barrel  it  sent  to  Boston,  and  on  every  barrel 
anyone  else  sent.  The  South  Improvement  Company  was  to 
receive  sums  ranging  from  40  cents  to  $1.33,  and  averaging  a 
dollar  a  barrel  on  all  shipments,  whether  made  by  itself  or 
others.  This  would  give  the  company  an  income  of  a  dollar  a 
day  on  every  one  of  the  18,000  barrels  then  being  produced  daily, 
whether  its  members  drilled  for  it,  or  piped  it,  or  stored  it,  or 
refined  it,  or  not." 

IS'ow,  when  Mr.  Lloyd  wrote  this,  and  there  is  a 
whole  chapter  of  twenty-two  pages  devoted  to  it,  be- 
sides repeated  references  throughout  the  whole  book, 
he  knew  that  this  so-called  South  Improvement  Com- 
pany was  a  myth — that  it  never  had  any  real  existence. 
He  knew  that  it  never  produced,  refined,  bought,  sold 
or  transported  a  gallon  of  oil,  nor  did  a  dollar's  worth 
of  business  of  any  kind  whatever.     In  short  he  knew 

4 


50  TRUSTS  AND   THE   PUBLIC 

that  it  was  nothing  more  nor  less  than  a  projected 
scheme  which  was  never  born.  Consequently,  all  this 
effort  to  create  the  impression  that  it  compelled  rail- 
roads to  double  freight  charges  on  all  the  competitors 
of  the  South  Improvement  Company,  and  pay  to  it  the 
booty,  which  amounted  to  a  tax  on  its  competitors  of 
$18,000  a  day  for  the  permission  to  do  business,  is  equal 
to  outright  misrepresentation. 

It  would  be  just  as  true  to  say  that  because  a  number 
of  persons  met  in  a  hotel  and  agreed  that  they  would 
raise  the  price  of  food  so  high  that  a  million  people 
would  die  of  starvation,  they  actually  caused  the  death 
of  a  million  people,  when  neither  the  rise  of  price,  the 
starvation,  nor  deaths  occurred. 

It  is  also  assumed  that  the  Standard  Oil  Company  is 
responsible  for  all  that  the  Improvement  Company  is 
alleged  to  have  contemplated,  whereas  the  evidence 
shows  no  connection  between  them  further  than  that 
certain  members  of  the  Standard  Company  subscribed 
for  stock  in  the  Improvement  Company,  as  likewise  did 
many  of  the  Standard  Company's  most  bitter  opponents, 
while  other  prominent  members  of  the  Standard  Com- 
pany were  among  those  who  procured  the  death  of  the 
South  Improvement  Company. 

Throughout  the  entire  five  hundred  j3ages  constant 
reference  is  made  to  this  South  Improvement  Company 
as  if  it  actually  had  done  all  this  statement  says  it  in- 
tended to  do.  Such  is  the  kind  of  economic  history 
Mr.  Lloyd  is  trying  to  make.  The  scandalous  South 
Improvement  Comj^any  story  has  already  found  its  way 
into  serious  economic  literature  in  England.  In  his 
"  Evolution  of  Modern  Capitalism,"  published  in  the 
Contemporary  Science  Series,  Mr.  Hobson  reproduces 


INTEGRITY   OF   ECONOMIC    LITERATURE  5 1 

this  whole  story,  together  with  numerous  other  mis- 
statements of  fact  gathered  from  similar  sources,  all  of 
which  are  presented  in  the  most  serious  manner  as  if 
they  were  verified  data. 

"Were  the  evil  influence  of  such  misrepresentation 
limited  to  its  original  utterance,  this  might  be  a  small 
affair ;  but  when  it  is  reproduced  in  permanent  and 
otherwise  reliable  literature  it  is  quoted  as  authorita- 
tive matter  and  thus  becomes  a  means  of  polluting  the 
stream  of  economic  knowledge  at  its  very  source. 

His  next  chapter,  entitled  :  "  You  Are  Not  to  Eefine," 
is  devoted  to  working  up  to  white  heat  the  case  of  a 
ruined  widow.  It  is  narrated  under  such  headings  as 
"  The  Widow's  Cruse,"  "  By  the  Agent's  Conscience," 
"  Judgment-Day  Law,"  etc.  This  is  a  case,  Mr.  Lloyd 
tells  us,  of  "one  of  the  pioneer  manufacturers  of 
Cleveland.  He  was  a  prominent  member  of  the  First 
Presbyterian  Church,  was  at  onetime  President  of  the 
Young  Men's  Christian  Association,  and  was  active  in 
all  enterprises  of  a  religious  and  benevolent  character." 
He  began  refining  petroleum  in  1860,  and  continued  in 
the  business  until  his  death  in  1874.  After  his  death 
his  wife  continued  the  business.  She  is  reported  as 
saying  :  "My  husband  went  into  debt  just  before  his 
death  for  the  first  time  in  his  life.  For  the  interests 
of  my  fatherless  children,  as  well  as  myself,  I  thought 
it  my  duty  to  continue  the  business.  I  took  seventy- 
five  thousand  of  the  hundred  thousand  of  stock  and 
continued  from  that  time,  1874,  until  November,  1878, 
making  handsome  profits,"  which,  Mr.  Lloyd  says, 
were  "  about  twenty-five  thousand  a  year." 

He  then  describes  a  plot  on  the  part  of  the  Standard 
Oil  Company  to  ruin  the  widow,  in  comparison  with 


52  TRUSTS   AND   THE   PUBLIC 

which  the  methods  of  the  Inquisition  were  mild  and 
humane.  She  tinally  sold  her  interest  in  the  works 
and  good- will  for  $60,000,  agreeing  not  to  re-enter  the 
business  in  competition,  which  is  the  usual  custom 
when  selling  business  good-will.  She  was  evidently 
made  to  believe  soon  afterwards  that  she  had  sold  for 
too  little,  whereupon  she  wrote  a  long  letter  to  the 
president  of  the  trust  charging  him  with  wronging  her 
and  warning  him  that  he  would  have  to  account  for 
this  at  the  Judgment  T>b,j.  It  appears  that  $60,000 
was  about  three  times  what  it  would  cost  to  construct 
new  and  better  facilities  than  her  factories  furnished. 
The  upshot  of  the  whole  business  was  that  the  trust 
offered  to  return  her  property  if  she  would  return  the 
money,  or  offered  to  sell  her  one,  two  or  three  hun- 
dred shares  of  the  stock  at  the  price  that  had  been 
paid  her  for  it — all  of  which  she  declined. 

Yet,  in  the  face  of  the  fact  that  she  could  have  her 
property  back — which  is  not  usual  in  business  trans- 
actions, if  there  is  any  profit  in  keeping  it — or  that  she 
could  have  shares  in  the  stock  under  the  new  manage- 
ment, where  the  business  was  expected  to  be  more 
profitable,  or  actually  receive  for  her  property  three 
times  what  it  would  cost  to  replace  it,  Mr.  Lloyd 
devotes  a  whole  chapter  to  a  most  heartrending 
description  of  how  this  widow  was  robbed  and  wronged. 
In  order  to  give  a  semblance  of  basis  for  his  case,  he 
says :  "  The  cost  of  the  work  is  not  the  standard  of 
value  in  such  transactions."  He  assumes  that  be- 
cause at  one  time  this  woman's  property  yielded  a 
profit  of  $25,000  a  year,  its  value  should  still  have 
been  estimated  on  an  earning  capacity  of  that  amount. 
But  why,  then,  did  she  refuse  to  take  it  back  ?     The 


INTEGRITY   OF   ECONOMIC   LITERATURE  53 

fact  is  that  the  property  had  passed  its  large  profit- 
making  stage,  and  was  rapidly  being  superseded  by 
improved  methods  which  would  soon  reduce  its  value 
to  that  of  old  iron,  which  is  commonl}^  the  case  with 
factories  of  all  kinds.  She  evidently  knew  this  and 
preferred  the  money  to  the  factory. 

From  all  the  facts  given  in  this  nameless  widow's 
case,  it  is  clearl}^  making  "  much  ado  about  nothing." 
The  whole  chapter  is  a  frantic  attempt  to  play  upon 
sentiment  by  weaving  a  malicious  and  virtually  lying 
threat  through  the  whole  statement,  wdth  the  obvious 
purpose  of  creating  a  false  impression.  There  is  noth- 
ino;  in  the  case  to  show  that  the  woman  w^as  wronged, 
except  the  vicious  inferences  of  the  WTi<"er.  On  the 
contrary  many  of  the  facts  tend  to  show  that  she  was 
generously  treated ;  that  what  she  obtained  for  her 
plant  was  largely  gain,  since,if  she  had  not  sold  it,  it 
would  soon  have  become  valueless  through  the  supe- 
rior methods  employed  by  the  new  competing  concerns. 

Another  instance  of  martyrdom  to  w^hich  Mr.  Lloyd 
devotes  a  sixteen-page  chapter  with  the  suggestive 
title  :  "  I  Want  to  Make  Oil"  is  the  case  of  Mr.  Yan 
Syckel,  an  inventor.  This  story  is  a  duplicate  of  hun- 
dreds and  perhaps  thousands  of  cases  of  inventors — 
except  that  few  are  told  with  such  harassing  and 
wrath-inspiring  force  as  is  this  one.  It  is  a  general 
characteristic  of  inventors  that  they  are  greatly  lack- 
ing in  executive  ability  or  practical  sense.  While  they 
originate  the  abstract  idea,  they  very  seldom  complete 
the  process.  Before  an  invention  can  become  usable, 
it  generally  has  to  be  vary  much  improved  ;  indeed,  it 
has  practically  to  be  evolved  by  an  indefinite  number 
of  experiments  and,  not  infrequently,  after  years  of 


54  TRUSTS   AND   THE   PUBLIC 

trial  and  an  expenditure  of  thousands  upon  thousands 
of  dollars,  it  just  fails. 

It  would  probably  be  a  moderate  estimate  to  say 
that  hundreds,  perhaps  thousands,  of  such  inventions 
fail  for  every  one  that  is  reduced  to  practical  use.  In 
every  instance  the  inventor,  even  though  he  is  paid 
a  salary  for  several  years,  while  developing  his  inven- 
tion, believes  that  he  is  swindled  out  of  a  fortune- 
making  discovery  ;  whereas,  it  is  more  frequently  true 
that  thousands  of  dollars  have  been  wasted  to  give  him 
an  opportunity  to  develop  a  failure.  Of  course,  this 
is  the  only  way  that  inventions  can  be  developed,  but 
the  fact  remains  that  not  one  per  cent,  of  inventions 
are  a  success. 

A  statement  recently  appeared  in  the  public  print  to 
the  effect  that  the  Western  Union  Telegraph  Company 
made  a  business  of  "  gobbling  up,"  through  purchase, 
of  course,  all  inventions  in  telegraphy,  and  that  they 
then  stowed  them  away  or  destroyed  them  for  the 
purpose  of  preventing  the  inventors  from  realizing  a 
fortune  out  of  their  discoveries  and  heading  off  .suc- 
cessful competitors.  One  would  think  the  obvious 
absurdity  of  such  a  statement  would  prevent  its  passing 
the  blue  pencil  of  any  sane  editor.  Nothing  but 
insanity  could  prompt  such  action.  The  Western 
Union  could  have  no  motive  for  suppressing  or  destroy- 
ing an  invention  that  had  any  economic  merit.  Indeed, 
it  spends  thousands  of  dollars  every  year  to  discover 
new  devices  which  shall  enable  it  to  reduce  the  cost 
of  doing  its  business,  as  do  all  large  corporations  and 
not  a  few  individual  concerns. 

Now,  Mr.  Lloyd's  story  of  Mr.  Van  Syckel  is  pre- 
cisely of  this  kind.     It  recites  what  doubtless  Mr.  Yau 


INTEGRITY   OF  ECONOMIC   LITERATURE  55 

Syckel  believed,  mz. :  that  he  discovered  a  continuous 
process  of  distilling  oil — an  improvement  that  would 
be  a  saving  of  from  thirty  to  thirty-five  per  cent,  of 
labor  and  cost  in  the  process  of  distilling.  According 
to  Mr.  Lloyd's  story,  the  new  process  was  demonstrated 
to  be  a  complete  success,  and  yet  the  Standard  Oil 
Company,  after  having  paid  Yan  Syckel  "$125  a 
month  while  he  was  testing  and  improving  the  inven- 
tion and  $75  a  month  afterwards,  deliberately  sup- 
pressed the  invention ;  would  neither  use  it  nor  permit 
anybody  else  to  use  it,  nor  pay  Yan  Syckel  for  it." 
This  is  conduct  which  nobody  but  malicious  idiots 
could  be  guilty  of,  and  only  an  infatuated  fanatic 
could  expect  intelligent  people  to  believe  such  a  tale. 
If  that  invention  had  been  a  success,  nothing  would 
induce  the  Standard  Oil  Company  to  refrain  from 
using  it.  Whatever  else  may  be  said  of  the  members 
of  the  Standard  Oil  Company,  they  were  never  sus- 
pected of  throwing  away  the  possibility  of  increased 
profits  for  a  sentiment.  They  may  have  been  heartless, 
but  they  never  before  were  charged  with  being  idiots. 
Nothing  can  be  more  conclusive  proof  of  the  fallacy  of 
this  story  than  the  fact  that  no  such  process  is  in  use 
anywhere  in  the  world.  The  Standard  Oil  Company 
would  doubtless  give  half  a  million  dollars  to-morrow 
for  such  an  invention,  and  yet,  in  order  to  make  out 
that  the  Standard  Oil  Company  exists  chiefly  for  evil, 
Mr.  Lloyd  asks  the  public  to  believe  that,  solely  to 
injure  a  poor  old  inventor,  it  is  suppressing  a  discovery 
by  which  it  could  make  millions.  And  the  most  sur- 
prising part  of  it  all  is  that  such  a  respectable  house  as 
Harper  Bros,  could  be  induced  to  publish  such  stuff  as 
sane  literature,  and  such  men  as  the  Eev.  Lyman 


56  TRUSTS  AND   THE  PUBLIC 

Abbott  can  swallow  it  all  without  a  question  as  if  it 
were  rational  and  verified  truth. 

We  now  come  to  the  "  Rice  "  or  "  Marietta  "  case, 
which  operated  so  effectually  upon  the  heart-strings  of 
the  editor  of  The  Outlook.  Mr.  Lloyd  has  laid  himself 
out  to  make  the  reader's  blood  boil  with  indignation 
in  this  instance.  He  has  given  three  whole  chapters 
to  it  which  bristle  throughout  with  insinuating  quota- 
tion marks,  so  used  as  to  misrepresent  by  what  they 
omit.  In  Mr.  Lloyd's  hands  the  "  Eice  "  case  is  really 
a  fine  piece  of  revolution-creating  literature.  It  is 
well  calculated  to  incite  the  mob  to  a  rich-killing  or 
mansion-sacking  crusade. 

After  describing  Mr.  Eice  as  coming  from  the 
"  Green  Mountains  of  Yermont  "  and  entering  "  the 
oil  business  when  he  and  it  were  young,"  and  build- 
ing up  "  a  new  industry  and  a  new  place,"  he  devotes 
eight  pages  to  showing  how  the  plot  to  ruin  him  was 
worked,  and  says  (page  206) : 

"  The  railroad  over  which  he  ran  his  tank-car 
doubled  his  freight  to  35  cents  a  barrel,  from  17|-.  That 
was  not  all.  The  same  railroad  brought  oil  to  the  com- 
bination's Marietta  refineries  at  10  cents  a  barrel,  while 
they  charged  him  35.  That  was  not  all.  The  railroad 
paid  over  to  the  combination  25  cents  out  of  every  35 
cents  he  paid  for  freight.  If  he  had  done  all  the  oil  busi- 
ness at  Marietta,  and  his  rival  had  put  out  all  its  fires 
and  let  its  works  stand  empty,  it  would  still  have  made 
25  cents  a  barrel  on  the  whole  output." 

]^o  one  could  read  this  without  being  inspired  by 
the  feeling  it  is  intended  to  convey,  viz. :  that  it  was 
a  high-handed  outrage  which  would  justify  summary 
treatment,  and  when  one  learns  from  a  most  passionate 


INTEGRITY   OF   ECONOMIC   LITERATURE  57 

portrayal,  much  of  which  is  repeated  several  times  in 
different  forms,  that  by  this  means  an  honest,  enter- 
prising man,  whose  success  his  daughters  helped  to 
secure  by  working  in  the  business  with  him,  was  finally 
ruined  and  his  family  wrecked,  it  is  difficult  to  suppress 
the  impulse  to  inaugurate  lynch  law,  but  if  we  read 
the  report  of  testimony  taken  by  the  Fiftieth  Congress, 
in  which  the  whole  case  is  printed,  we  find  that  much 
more  inflammation  is  imparted  to  it  by  Mr.  Lloyd  than 
by  the  facts.     Briefly  stated,  the  facts  are  these  1 : 

Mr.  Eice  was  an  oil  refiner  in  Marietta,  the  market  for 
which  was  Cleveland,  Ohio.  The  oil  was  partly  taken 
through  pipe  lines  and  partly  by  rail.  The  railroad 
agreed  to  charge  for  the  entire  distance,  including  pipe 
lines,  35  cents  a  barrel  for  shipment,  25  cents  of  which 
was  to  be  paid  to  the  owners  of  the  pipe  line  for  its 
portion  of  the  service  ;  the  railroad  to  have  10  for  its. 
Consequently,  all  oil  shipped  from  Marietta  to  Cleve- 
land was  charged  35  cents  a  barrel,  subject  to  the  above 
divisions  between  the  owners  of  the  pipe  line  and  the 
owners  of  the  railroads.  This  applied  to  all  shippers, 
one  of  whom  was  Mr.  Eice.  Now,  the  Standard  Oil 
Company  owned  the  pipe  line,  hence  it  paid  only  the 
10  cents  which  belonged  to  the  railroad  for  its  portion 
of  the  service.  There  had  been  considerable  friction  be- 
tween Mr.  Eice  and  the  Standard  Oil  Company,  and  he 
had  laid  a  pipe  line  of  his  own,  and  therefore  did  not  ship 
through  the  pipes  of  the  Standard.  This  arrangement 
for  35  cents  a  barrel  was  originally  made  for  all  oil 
that  came  from  Marietta,  regardless  of  whether  it  used 


1  Testimony   taken   by  the  House   of  Representatives,  1888 ; 
pp.  374-5. 


5*  TRUSTS  AND   THE   PUBLIC 

the  Standard  pipe  line  or  not,  so  that  Mr.  Eice  ^Yas 
charged  the  35  cents  a  barrel  although  he  sent  it  to 
the  railroad  through  his  own  pipe  line.  That  is  to  say, 
he  was  charged  35  cents,  though  he  used  the  railroad 
service  only  ;  the  25  cents  for  pipe  line  service  went  to 
the  Standard  just  the  same  as  if  his  oil  had  gone  through 
their  line. 

This  was  an  obvious  hardship.  Still,  it  was  of  the 
same  character  as  many  other  transportation  arrange- 
ments, such  as  the  long  and  short  haul  principle  where- 
by shippers  for  the  shorter  distance  pay  more  for  the 
same  amount  of  freight  than  shippers  for  a  longer  dis- 
tance, and  there  are  conditions  under  which  this  is  dis- 
tinctly economic  and  justifiable.  All  the  elevated, 
cable  cars  and  electric  railroads  in  New  York  and  other 
large  cities  are  run  on  the  same  principle.  They  charge 
as  much  to  ride  a  block  as  to  ride  five  miles.  This 
seems  to  be  something  of  an  American  idea.  In  Lon- 
don, for  instance,  the  underground  railroads  and  the 
busses  everywhere  have  different  rates  for  different 
distances. 

"We  do  not  cite  this,  however,  to  justify  the  treat- 
ment of  Mr.  Eice,  but  only  to  show  that  it  was  not  an 
entirely  new  and  novel  method  of  making  transporta- 
tion charges.  If  this  arrangement  liad  been  made  per- 
manent and  had  resulted  in  Mr.  Eice's  ruin  it  would 
go  far  to  justify  Mr.  Llo^'d's  position,  regardless  of  the 
fact  that  it  was  a  practise  commonly  adopted  in  rail- 
roading. But  the  truth  is  that  the  arrangement  was 
a  temporary  affair  lasting  only  a  very  short  time.  It 
was  made  by  an  agent  of  the  pipe  line  company,  and 
when  brought  to  the  attention  of  the  company's  coun- 
selit  was,  under  his  advice,  discontinued,  and,  what  is  of 


INTEGRITY   OF   ECONOMIC   LITERATURE  59 

still  more  importance,  the  whole  amomitof  this  charge 
for  pipe  line  service  which  Mr.  Kice  did  not  receive 
was  less  than  $250  and  every  ■penny  of  it  was  returned 
to  him,  so  that  Mr.  Rice  finally  lost  nothing  by  this 
so-called  over-charge. 

These  facts  are  nowhere  mentioned  by  Mr.  Lloyd, 
although  he  spreads  the  discussion  of  the  case  over 
three  whole  chapters.  Everything  he  says  regarding 
the  matter  is  intended  to  convey  the  idea  that  Mr. 
Rice  paid  35  cents  a  barrel  while  the  Standard  Oil 
Company  only  paid  10  cents  and  the  extra  25  cents 
went  into  the  pockets  of  the  Standard  Oil  Company, 
and  that  this  continued  until  Mr.  Rice  was  ruined  by 
the  process. 

Such  a  statement  of  the  case  is  equivalent  to  positive 
misrepresentation,  especially  when  accompanied  by 
pages  upon  pages  of  inflammatory  insinuations,  charg- 
ing it  all  to  the  mythical  South  Improvement  Company. 

We  have  no  idea  that  the  members  of  the  Standard 
Oil  Company,  individually  or  collectively,  are  very 
much  better  or  worse  than  other  people.  Their  meth- 
ods have  been  the  methods  of  business  men  generally. 
Self-interest  and  not  the  golden  rule  has  doubtless  been 
their  chief  inspirer.  Nor  have  we  any  desire  to  hold 
them  up  as  models  except  to  the  extent  that  they  have 
introduced  improvements  into  productive  processes 
and  business  methods.  J^or  are  we  in  the  least  op- 
posed to  the  full  exposure  of  any  economic  mistakes 
they  have  made  or  social  wrongs  they  may  have  com- 
mitted. It  is  only  by  the  exposure  of  the  Avrong  that 
the  right  can  be  permanently  established.  But  what 
we  are  particularly  interested  in  is  the  integrity  of 
economic  literature. 


60  TRUSTS   AND   THE   PUBLIC 

We  protest  against  the  wholesale  misrepresentations 
of  industrial  facts  and  the  poisoning  of  economic  mo- 
tives merely  to  gratify  the  ravings  of  fanatical  opposi- 
tion to  aggregated  capital ;  and  we  specially  protest 
against  such  wholesale  libels  passing  for  reliable  econo- 
mic information.  It  is  more  important  to  maintain 
the  integrity  of  economic  literature  than  to  overthrow 
the  largest  trust  that  ever  existed. 

Such  books  as  "  Wealth  Against  Commonwealth " 
are  calculated  to  do  more  to  inv^alidate  history  and  cor- 
rupt the  morals  of  public  thought  and  action  than  could 
a  hundred  trusts.  If  the  channels  of  information  are 
to  be  polluted  with  impunity  by  wholesale  misrepre- 
sentation of  industrial  data,  then  the  integrity "^of  our 
economic  information,  the  validity  of  our  industrial 
history  and  social  literature,  are  destroyed. 


lY. 

AEE  LUXUKIES  WASTED  WEALTH?"^ 

The  public  mind  at  the  present  time  is  in  something 
of  a  fever  of  opposition  to  wealth.  The  great  object 
seems  to  be  to  find  some  way  of  suppressing  wealth  or 
punishing  those  who  have  any.  If  the  rich  devote  their 
"wealth  to  productive  enterprise,  we  call  for  legislation 
to  suppress  them  lest  they  should  make  any  profits. 
"We  are  having  a  flood  of  legislation  against  trusts,  and  a 
trust  is  anything  that  is  large  and  successful  and  makes 
any  profits,  or  introduces  any  improvements  into  the 
business.  A  bill  is  pending  in  Massachusetts,  for  in- 
stance, imposing  a  penalty  of  from  $100  to  $5,000  fine, 
or  imprisonment  for  a  year,  or  both,  upon  any  person 
who,  going  into  business,  lessens  competition  and  drives 
others  out,  and  the  parties  driven  out  also  have  right 
of  damages  against  their  successful  competitors.  On 
the  other  hand,  if  the  rich  spend  their  money  socially, 
we  raise  a  great  cry  throughout  the  country  about 
their  criminal  extravagance,  and  the  ministers  and 
sentimentalists  are  all  up  in  arms.  If,  finally,  they  go 
abroad  and  take  their  millions  with  them,  we  assail 
them  as  being  mean  and  unpatriotic,  while  if  they 
simply  hoard  up  their  wealth  and  do  nothing  with  it 

*  Lecture  delivered  in  New  York  City,  Feb.  3,  1897. 

61 


62  TRUSTS  AND   THE  PUBLIC 

we  denounce  them  as  misers.  It  would  seem  that  the 
only  thing  for  a  rich  man  to  do  is  to  get  rid  of  his 
wealth  as  soon  as  possible  and  reduce  himself  to  the 
same  state  of  poverty  that  the  poor  enjoy  and  find  so 
satisfactory  and  desirable.  Then,  and  then  only,  it 
seems,  will  they  be  able  to  stand  high  in  the  public 
favor. 

The  Bradley  Martin  ball  is  one  of  the  prominent  in- 
cidents that  is  calling  forth  a  good  deal  of  discussion 
on  this  subject  of  wealth.  Is  this  affair  to  be  regarded 
as  a  social  calamity,  and  ought  public  sentiment  and 
legislation  to  be  invoked  to  put  a  stop  to  it,  or  is  there 
another  side  to  it,  and  are  we  entitled  to  pass  judg- 
ment upon  a  whole  series  of  public  and  social  institu- 
tions because  there  are  a  few  butterflies  here  and  there 
who  do  not  know  how  to  exercise  good  taste  in  their 
expenditures,  and  exhibit  an  abnormal  desire  for  mere 
vain  display  ? 

Yery  much  of  this  sort  of  opposition  looks  like  turn- 
ing back  to  the  conditions  against  which  the  world  has 
been  struggling  for  centuries.  For  instance,  the  N'ew 
York  Press  this  morning  made  a  great  uproar  because 
a  man  in  overalls  was  not  allowed  to  go  into  the  Met- 
ropolitan Museum.  Of  course  he  was  not,  nor  should 
he  have  been.  To  make  that  sort  of  thing  respectable 
throughout  the  community  would  be  the  worst  possi- 
ble thing  that  could  be  done  for  the  workingraan. 
Laborers  when  they  visit  places  of  that  nature  ought 
to  observe  the  same  decencies  and  civilized  customs 
that  are  observed  by  the  rest  of  the  public,  for  they 
will  then  insist  upon  wages  sufficient  to  enable  them  to 
meet  those  requirements.  Let  it  be  established  that 
overalls  are  good  enough  to  go  to  museums  in,  and 


ARE   LUXURIES  WASTED   WEALTH?  63 

they  will  soon  be  good  enough  to  go  to  church  in,  and 
to  the  opera  in,  and  everywhere  in,  and  we  shall  have 
really  very  little  need  of  decent  clothes  at  all,  and  our 
wages  and  civilization,  following  along  that  same  line 
of  ideas,  will  eventually  get  down  to  the  overalls  level. 
"We  do  not  want  to  turn  back  to  any  one-suit-of-clothes 
state  of  civilization.  It  has  taken  centuries  for  the 
workingman  to  assert  and  establish  a  standard  of  living 
that  shall  demand  something  better  than  that,  and  the 
superficial  clamorers  who  are  insisting  upon  the  social 
recognition  of  overalls  as  good  enough  for  all  places 
and  occasions  are  really  the  worst  enemies  the  working- 
men  have.  What  we  want  is  that  laborers  shall  insist 
upon  clothing  fit  for  such  places,  and  insist  upon  wages 
sufficient  to  buy  such  clothing.  "We  do  not  want  five- 
cent  dinners,  and  bean-pod  soup  at  two  cents,  and  over- 
alls on  Sunday,  and  we  will  not  have  them. 

As  early  as  the  fourteenth  century  the  struggle  over 
this  question  began.  The  workingraen  in  England 
made  their  first  efforts  for  an  increase  of  wages,  and 
they  were  at  once  legislated  against.  They  were  not 
to  ask  for  more  pa}^,  and  it  was  prescribed  very  care- 
fully what  they  were  to  eat  and  wear  and  have  in  their 
houses.  They  should  not  wear  clothes  that  cost  more 
than  eight  pence  a  yard,  and  should  have  practically 
no  meat,  and  should  piece  out,  from  time  to  time,  with 
the  "  offal  from  the  master's  table,"  and  so  on.  And 
later  on,  when  people  began  to  have  windows  and 
chimneys  in  their  houses,  the  laborers  were  denounced 
as  inexcusably  extravagant  and  as  enemies  of  the  prog- 
ress of  the  realm,  because  they  too  began  to  want 
windows,  and  doors  on  hinges,  and  objected  to  having 
the  smoke  go  out  through  the  door  instead  of  up  a 


64  TRUSTS  AND  THE   PUBLIC 

chimney.  Of  course  the  laborers  finally  won  their 
struggle,  and  little  by  little  gained  the  privilege  of  eat- 
ing and  dressing  and  living  as  they  chose.  Things 
seem  to  have  undergone  a  remarkable  turn-about  since 
then.  'Now  it  is  the  laborers  themselves  v^ho  are  dic- 
tating what  shall  be  eaten  and  worn  by  the  rich,  and 
how  they  shall  conduct  themselves.  Having  struggled 
for  centuries  against  just  this  sort  of  interference  with 
personal  liberty,  they  are  now  endeavoring  to  apply  it 
in  turn  to  the  very  classes  whom  they  were  once  de- 
nouncing for  trying  to  inflict  it  upon  them.  They 
were  right,  of  course,  in  insisting  upon  windows  and 
chimneys  and  such  food  and  clothing  as  they  liked  and 
could  get,  on  the  ground  of  personal  liberty,  but  per- 
sonal liberty  to-day,  it  appears,  has  no  application  to 
fancy  balls. 

After  about  four  centuries  of  this  struggle  on  the 
part  of  the  wage-workers,  came  Adam  Smith  with  his 
gospel  that  the  secret  of  social  progress  is  parsimony  ; — 
use  as  little  and  save  as  much  as  possible.  He  thought 
it  was  prodigality  for  a  workingman  to  burn  a  candle 
after  eight  o'clock  at  night,  and  on  the  other  hand  that 
a  rich  man  was  a  very  bad  thing  to  have  in  any  town. 
That  idea  of  parsimony  has  permeated  English  econom- 
ic thought  down  almost  to  the  present  day,  and  work- 
men have  taken  it  on,  to  the  extent  of  holding  the 
idiotic  doctrine  that  everybody  who  consumes  more 
than  they  do  is  inflicting  an  injury  upon  society. 

About  a  week  ago  the  New  York  Journal  inter- 
viewed the  secretary  of  the  United  Garment  Workers' 
Union,  and  Prof.  Felix  Adler,  on  the  subject  of  this  ball. 
The  labor  leader  said  that  luxuries  meant  wealth 
wasted,  and  Prof.  Adler  said  that  the  laboring  men 


ARE  LUXURIES  WASTED  WEALTH?  6$ 

■would  not  get  any  real  benefit  from  the  ball.  As  you 
know,  I  regard  almost  every  thing  affecting  the  welfare 
of  the  community  as  turning  upon  the  way  it  affects 
the  laborers.  If  balls  were  bad  things  for  the  laborers 
I  should  be  opposed  to  them ;  if  they  are  good  for 
them,  I  favor  the  balls. 

There  was  a  time,  as  I  have  said,  when  the  laborers 
did  not  have  chimneys  or  windows  in  their  houses,  no 
furniture,  practically  no  decent  clothing,  and  lived 
upon  bread  and  herring  and  barley  beer,  and  got  six- 
pence a  day  wages.  ISTow,  how  have  the  things  come 
into  existence  that  furnish  the  appointments  of  the 
homes  occupied  by  the  average  citizen  of  to-day  in  the 
more  advanced  countries  ?  Has  it  been  by  anything 
the  workingmen  have  done  ?  Have  they  introduced 
any  such  industries  as  silk  weaving,  for  instance  ?  Not 
so.  There  never  would  have  been  silk  enough  made  to 
go  into  one  dress  of  a  mechanic's  wife  if  silk  had  not 
been  first  used  by  kings  and  the  aristocracy  and  those 
who  were  willing  to  pay  the  great  sums  necessary  in  the 
first  instance  to  have  it  made.  It  was  then  the  ex- 
ceptional social  need,  and  it  was  called  extravagance, 
just  as  Adam  Smith  called  burning  a  candle  after 
eight  o'clock  extravagance  for  the  workingman. 
After  the  yery  rich  begin  to  have  these  things  and 
pay  the  high  prices  necessary  to  get  them,  then  the 
next  below  begin  to  contrive  so  as  to  get  some  them- 
selves, and  finally  there  is  enough  demand  to  establish 
a  small  permanent  business,  and  as  a  result  the  price 
falls  a  little.  Then  a  still  wider  circle  of  consumers 
come  in  and  begin  to  use  the  once  unapproachable 
luxury,  and  this  permits  in  turn  still  lower  prices,  and 
by  the  repetition  of  this  process  it  finally  gets  down  to 
5 


66  TRUSTS  AND   THE  PUBLIC 

the  level  of  all  of  us,  and  the  articles  are  produced  in 
immense  factories  by  the  best  and  cheapest  machine 
methods,  and  at  the  minimum  cost.  It  is  in  this  way 
that  we  have  come  into  the  enjoyment  of  practically 
everything  we  have  outside  of  the  crudest  necessities. 

Those  of  you  who  are  familiar  with  European  cities 
know  that  when  the  court  is  away  from  London  or 
Berlin  business  goes  into  mourning,  laborers  are  out  of 
work,  and  everything  is  stagnant.  Why  ?  Because 
when  the  court  goes  to  London  the  aristocracy  goes 
there  and  what  is  called  the  London  season  sets  in,  and 
that  not  only  puts  in  circulation  several  millions  of 
dollars,  but  gives  employment  to  thousands  and  makes 
all  the  difference  between  panic-stricken  London  and 
prosperous  London,  and  it  is  panic-stricken  London 
that  tells  its  story  in  Whitechapel  and  the  East  End. 
If  the  garment  makers'  secretary  I  have  mentioned 
understood  the  first  principles  of  the  situation  he  would 
know  that  variation  of  social  taste  is  the  very  life  of 
his  industry.  Take  China.  They  have  had  no  change 
in  the  cut  of  their  smock  for  a  thousand  years.  ■  l^o- 
body  needs  to  have  a  new  coat  because  coats  are  made 
to  last  a  lifetime,  and  very  often  the  same  coat  will  be 
willed  from  father  to  son,  and  finally  worn  out  by  him 
as  a  night-shirt.  I  tell  you,  any  country  in  which  one 
coat  will  last  a  lifetime  is  a  country  having  neither 
taste,  high  social  standard,  high  wages,  intelligence, 
nor  freedom. 

The  opera  is  in  town,  and  that,  too,  is  called  a 
waste.  Will  the  workingmen  and  mechanics  go  ?  Of 
course  not.  Thej^,  at  least,  will  waste  nothing  on  it. 
It  has  to  be  supported  by  the  comparatively  rich. 
Now,  suppose  you  suppressed  the  opera  as  an  extrava- 


ARK  LUXURIES  WASTED   WEALTH?  6/ 

gance.  You  would  suppress  the  highest  development 
of  music,  and  help  to  take  out  perhaps  the  most  refin- 
ing, softening  and  cultivating  force  in  civilization.  As 
a  result  of  the  opera  we  have  thousands  of  musicians 
preparing  for  that  work  and  falling  a  little  short,  and 
we  get  the  benefit  of  them  in  concerts  and  churches 
and  in  our  homes.  Music  becomes  a  common  accom- 
plishment. The  opera  is  one  of  the  contributions  that 
the  rich  make  to  society,  not  intentionally  as  such,  of 
course,  but  the  social  law  is  stronger  than  their  de- 
sires. I  am  willing  that  they  should  be  foolish,  per- 
haps, for  a  while,  because  they  cannot  stop  the  rest  of 
us  from  getting  the  benefit  of  what  they  introduce. 

I  say,  therefore,  that  there  is  no  greater  error  than 
to  describe  luxuries  as  wasted  wealth.  There  is  hardly 
a  single  thing  that  has  become  the  customary  neces- 
sity of  civilization  that  was  not  once  a  luxury — an  ex- 
travagance converted  into  a  necessity  by  common 
social  use.  Diogenes,  you  know,  when  he  saw  the 
shepherd  boy  scooping  up  water  in  his  hand,  said: 
"  What  an  economy  that  is  ;  what  need  have  we  of 
cups  when  nature  has  already  given  us  hands  to  drink 
from!"  So  it  is.  Just  think  of  the  number  of  thing-s 
we  could  get  along  without.  If  we  would  only  get 
along  without  cups  and  what  cups  imply,  we  could 
close  up  all  the  factories  in  the  United  States  and  ef- 
fectually turn  back  the  dial  of  civilization  to  the  pre- 
Mosaic  type.  The  fact  is,  every  comfort  and  con- 
venience we  have  acquired,  over  and  above  what  is 
represented  by  Diogenes'  shepherd  boy,  has  been  a 
luxury,  relatively  to  what  was  before,  and  in  that 
development  we  have  simply  the  record  of  man's 
growth  out  of  barbarism  into  civilization  and  enlight- 


68  TRUSTS  AND   THE   PUBLIC 

enment.  It  is  these  very  luxuries  converted  into  neces- 
sities that  make  the  difference  between  the  American 
laborer's  standard  of  living  and  that  of  the  Chinaman 
or  African.  If  these  luxuries  had  been  nipped  in  the 
bud  there  would  be  no  difference  now  between  iNew 
York  and  Poland,  To-day's  luxuries  are  to-morrow's 
necessities,  if  society  progresses.  It  is  only  in  that 
way  that  the  advantages  of  civilization  can  ever  be 
extended  to  the  working  people.  They  are  now  en- 
joying, in  common  use,  comforts  and  refinements  that 
to  their  fathers  would  have  been  unthought-of  extrav- 
agance. Henry  II.  slept  on  a  bed  of  rushes,  but  we 
would  have  a  half-dozen  revolutions  before  we  would 
get  anywhere  near  that  condition  again.  The  dif- 
ference between  rushes  and  beds  is  the  result  of  the 
conversion,  through  several  centuries,  of  what  were 
then  luxuries  into  what  are  now  necessities  for  all. 

In  1875  I  -was  called  to  a  factory  town  in  Connecti- 
cut where  there  was  a  strike  in  progress.  I  found  in 
operation  there  the  "  truck  "  system,  under  which  the 
corporation  kept  a  store  with  all  the  supplies  it 
thought  its  employees  should  have,  and  had  a  record  of 
the  wages  in  one  book  and  purchases  in  the  other, 
managing  generally  so  that  the  two  about  balanced. 
At  that  time,  many  of  the  employees  had  not  drawn  a 
cent  in  wages  for  months,  thanks  to  truck-system 
bookkeeping.  They  had  a  church  there,  and  pew  rent 
was  regularly  charged  up  on  the  books,  also.  In  my 
interview  with  the  employer  he  complained  a  great 
deal  about  the  growing  extravagance  of  his  employees. 
There  had  lately  been  a  great  strike  in  Fall  River,  and 
his  employees  were  all  happy  and  contented  until  they 
heard  of  that  strike.    As  soon  as  Fall  River  people 


ARE   LUXURIES   WASTED   WEALTH?  69 

began  to  come  there,  and  labor  agitators  began  hold- 
ing meetings,  trouble  began.  The  men  began  spend- 
ing their  money  on  railroad  fare  to  attend  meetings, 
and  the  women  wanted  to  go  to  town  every  week  at 
least,  and  bought  frivolous  things  that  they  never 
used  to  want,  and  the  result  was  that  they  were  strik- 
ing against  a  10  per  cent,  reduction  with  which  they 
would  have  been  perfectly  contented  if  they  had 
never  heard  of  cities  at  all.  All  their  notions  and  ex- 
travagances were  so  much  pure  waste,  said  the  man- 
ager. 

It  was  not  waste  at  all.  Anything  that  adds  a  new 
thought  or  a  new  comfort  or  a  new  entertainment  or 
refinement  to  human  life  is  a  positive  gain,  and  not  a 
waste.  All  new  things  are  not  good,  but  in  the  pro- 
cess of  using  we  eliminate  the  vicious  and  keep  the 
good.  Kewly  discovered  articles  of  food  sometimes 
contain  poison,  but  do  we  on  that  account  abandon 
them  and  go  back  to  the  coarser  diet  ?  Not  at  all. 
"We  call  in  chemistry  to  purify  the  new  thing  and 
make  it  fit  for  permanent  use.  If  the  laboring  class 
could  have  been  kept  wearing  sheepskins,  they  would 
have  been  earning  10  cents  a  day  now  instead  of  $2 
or  $3,  and  we  should  have  had  a  10-cent-a-day  civiliza- 
tion. There  is  no  greater  mistake-  than  for  the  work- 
ing class  to  set  themselves  against  the  social  innova- 
tions at  the  top  of  societ}^,  because  there  is  not  a  single 
thing  that  is  introduced  there  that  does  not  percolate 
down.  We  see  an  example  in  the  case  of  the  servant 
girls,  who  are  complained  of  because  they  are  getting 
so  particular  about  their  privileges  and  exemptions 
and  so  on,  and  because  of  their  extravagance  in 
dress,  and  bad  taste,  and  all  that.     In  reality   that 


70  TRUSTS  AND   THE   PUBLIC 

is  the  hopeful  side.  It  means  the  beginning  of  better 
conditions  and  less  hard  work,  more  freedom  and 
more  civilization,  for  the  servant  girl  class.  Their 
taste  is  poor,  but  do  you  expect  them  to  wait  until 
they  have  become  artists  before  they  wear  bonnets  ? 
That  is  the  beginning  of  their  education.  If  it  is  true 
that  they  put  on  gloves  over  dirty  hands,  all  right, 
they  have  got  the  gloves  on  at  least,  and  that  does 
three  things,  hides  the  dirt,  starts  a  glove  factory,  and 
starts  the  person  wearing  the  gloves  into  the  society 
of  others  who  wear  gloves,  and  they  notice  that  these 
others  have  clean  hands,  and  finally  begin  to  wash 
their  own.  The  truth  is,  all  social  refinement  begins 
with  more  or  less  of  artificial  veneering,  but  finally  it 
penetrates  the  character  and  results  in  genuineness. 
Cleanliness  is  not  the  first  sign  of  civilization  that  gets 
into  the  slums.  If  you  put  in  bath  tubs  too  early 
they  may  be  used  for  coal  bins,  as  has  been  found 
from  actual  experience. 

Of  course  the  Bradley  Martin  ball  is  not  being  got- 
ten up  as  a  philanthropic  enterprise,  and  we  need  not 
expect  it  to  be.  It  is  surprising,  but  true,  that  the 
bulk  of  the  best  things  we  have  were  not  introduced 
from  the  best  motives.  If  we  were  never  to  have  a 
railroad  until  those  who  built  it  did  so  for  philan- 
thropic motives,  none  would  ever  be  built.  They  are 
built  because  we  ride  and  pay  fare.  We  can  get  rail- 
roads simply  by  making  them  profitable  to  the  pro- 
jectors by  riding  on  and  using  them.  Personally,  I 
expect  that  this  ball  is  a  sort  of  social  butterfly  affair. 
The  Bradley  Martins  made  a  great  effort  to  get  a 
daughter  married  to  a  foreign  prince,  and  that  meant 
that  they  would  spend  their  money  abroad.     "We  do 


ARE   LUXURIES  WASTED   WEALTH?  71 

not  want  that.  What  this  country  needs  is  that  our 
wealth  should  be  spent  here.  I  do  not  Avant  any  per- 
son who  can  afford  to  live  better  than  I  can  to  come 
down  to  my  level.  I  want  all  the  rest  of  you  to  help 
me  get  up  to  his  level,  and  the  more  there  are  like 
him  the  better  my  chance  of  success  in  that  line.  I 
do  not  like  to  see  American  capitalists  spending  their 
money  abroad,  and  changing  their  citizenship  because 
they  cannot  get  the  sort  of  social  life  here  that  they 
want.  But,  if  we  are  going  to  assail  and  punish  them 
every  time  they  endeavor  to  introduce  new  social  life 
here,  we  can  hardly  blame  them  much  for  going  where 
it  already  exists.  What  we  ought  to  do  is  to  encour- 
age the  growth  of  a  cultivated  class  here,  who  shall 
expend  their  millions  in  beautifying  our  own  country 
with  great  parks  and  estates,  and  in  establishing  a 
social  standard  that  shall  act  as  a  constant  incentive 
to  all  that  is  below.  If  you  can  make  it  impossible 
for  millionaires  to  live  here,  you  can  succeed  in  keep- 
ing back  the  growth  of  American  civilization.  You 
can  make  it  certain  that  whatever  we  have  in  the 
higher  forms  of  social,  musical,  artistic  and  literary 
life,  w^ill  be  of  the  second  rate  order,  because  we  shall 
have  no  class  able  to  pay  for  the  best.  What  we  want 
is  to  encourage  our  own  wealthy  classes  to  expend 
their  riches  here,  so  that  in  satisfying  their  own  de- 
sires they  shall  at  the  same  time,  in  spite  of  them- 
selves perhaps,  be  promoting  in  the  highest  and  most 
efficient  sense  American  art,  architecture  and  science, 
and  American  social  life. 


V. 

LAKGE  AGGKEGATIONS  OF  CAPITAL* 

Ake  large  aggregations  of  capital  necessary  to 
modern  progress  ?  The  only  point  of  view  from  which 
this  question  can  properly  be  considered  is  the  welfare 
of  the  community.  There  are  two  ways  in  which  the 
productive  machinery  of  society  can  promote  public 
welfare.  One  is  by  improving  the  quality  of  wealth 
produced,  and  the  other  by  lessening  its  cost  to  the 
public.  Whether  the  instruments  of  production  should 
be  owned  by  the  public  as  demanded  by  socialism,  or 
be  held  in  small  quantities,  as  under  the  domestic 
methods  which  prevailed  before  the  Hargreaves,  Ark- 
wright,  Crompton  and  Cartwright  inventions  of  the 
eighteenth  century,  or  by  increasingly  large  corporate 
concerns,  as  to-day,  turns  entirely  upon  which  of  these 
forms  of  industrial  organization  will  most  efiBciently 
furnish  the  community  with  consumable  wealth,  in 
respect  to  both  quality  and  price.  The  owners  of 
capital  or  productive  instruments  have  absolutely  no 
claim  upon  the  public  consideration  on  any  other 
grounds  than  efficiency  of  service  to  the  public,  as 
creators  of  wealth.  Capital  should  be  regarded  as  a 
tool,  and  as  a  tool  only ;  and  the  use  of  any  tool  is  jus- 
tifiable only  so  long  as  it  will  do  its  work  as  well  as 
or  better  than  other  tools  that  are  available. 

♦Published  in  the  New  York  Independent,  of  March  4,  1897, 
and  reprinted  in  Gimton's  Magazine  of  May  1897. 
72 


LARGE  AGGREGATIONS   OF  CAPITAL  73 

The  history  of  concentrated  capital  is  manifestly  the 
history  of  productive  economy  and  eflBciency.  Nearly 
all  the  great  productive  economies  giving  superior 
quality  and  reduced  prices  have  been  confined  to  those 
industries  w^here  corporate  capital  and  factory  methods 
have  been  employed.  Take,  for  instance,  cotton,  silk, 
woolen  and  other  fabrics.  Common  cotton  cloth,  which 
as  late  as  1830  cost  seventeen  cents  a  yard,  is  now 
quoted  at  less  than  four  cents ;  and  so  along  the  whole 
line.  Products  of  iron,  steel  and  wood  have  been  re- 
duced solely  by  these  processes  from  30  to  60  and  in 
some  instances  80  per  cent.,  which  means  that  the 
public  have  received,  in  each  instance,  a  superior  prod- 
uct for  this  constantly  diminishing  price.  If  we  turn 
to  the  class  of  industries  in  which  capital  has  not  been 
concentrated,  or  only  to  a  slight  extent,  we  find  that 
the  reverse  is  true,  and  prices  have  not  lessened  with 
the  progress  of  society. 

The  great  era  of  machine  methods  in  this  country 
is  since  1860.  According  to  the  senate  report,  which 
was  so  comprehensive  and  exhaustive,  there  were  fifty- 
eight  classes  of  products  the  prices  of  which  had  in- 
creased since  1860.  Some  had  risen  100  per  cent.,  and 
a  very  large  number  from  30  to  TO  per  cent.  With  one 
or  two  exceptions  they  were  all  agricultural  or  raw 
material  products,  in  which  the  concentration  of  capital 
and  the  use  of  machinery  had  been  very  slight.  On 
the  other  hand,  the  tables  give  140  groups  of  manufac- 
tured products  in  which  capital  is  considerably  con- 
centrated and  machinery  used  extensively,  and  in  all 
prices  had  fallen  from  6  to  40  per  cent.  The  fall  in 
the  prices  of  products  produced  by  capitalistic  methods 
was  enough  greater  than  the  rise  in  the  prices  where 


74  TRUSTS  AND   THE  PUBLIC 

hand  labor  and  small  capital  were  used  to  make  an 
average  fall  in  prices  of  about  4  per  cent.,  and  a  rise 
in  wages  of  68  per  cent.  That  is  to  sa}^  through  the 
processes  of  capitalistic  methods,  from  1860  to  1891, 
the  purchasing  power  of  a  day's  work  was  increased 
slightly  over  72  per  cent.,  which  is  only  another  way 
of  saying  that  concentrated  capital  increased  the  public 
welfare  21  per  cent,  every  ten  years  since  1860. 

Every  step  in  the  industrial  progress  of  society  has 
had  to  encounter  a  popular  opposition.  There  seems 
to  be  an  indefinite  impression  abroad  that  the  corpo- 
ration has  more  of  the  element  of  conspiracy  in  it  than 
the  individual  or  firm  type  ;  hence,  that  the  aggrega- 
tion of  capital  in  the  United  States  is  more  inimical  to 
public  welfare  than  in  other  countries.  This,  however, 
is  psychological  rather  than  economic.  Corporations, 
while  not  peculiar  to  the  United  States,  are  more  prev- 
alent here  than  elsewhere  for  definitely  good  and  suffi- 
cient economic  reasons.  In  Europe  the  progress  has 
been  sufficiently  slow  so  that  native  capital  could  accu- 
mulate fast  enough  to  keep  up  with  the  demands  of 
industrial  growth.  In  this  country  the  case  has  been 
quite  different.  For  reasons  it  is  not  necessary  to  enu- 
merate here  our  industrial  development  has  been  so 
rapid  and  colossal  that  we  were  wholly  unable  to  create 
the  individual  capital  necessary  to  supply  the  needs  of 
industr3\  Consequently  the  corporate  means  of  capital- 
izing was  evolved,  so  that  European  wealth  as  well 
as  the  scattered  pennies  of  our  own  people  could 
be  utilized  to  make  possible  the  great  railroad  and  other 
undertakings  in  this  country,  which  have  no  parallel 
in  any  other  part  of  the  world.  Had  we  been  com- 
pelled to  wait  for  the  development  of  individual  capital 


LARGE  AGGREGATIONS  OF  CAPITAL  75 

in  the  non-corporate  form,  this  development  would 
probably  have  been  delayed  half  a  century.  Corpora- 
tions, therefore,  are  peculiarly  American  institutions, 
not  because  they  contain  any  inferior  element,  but  be- 
cause they  are  the  utilization  of  the  cooperative  spirit 
made  necessary  by  our  exceptionally  rapid  industrial 
progress. 

It  is  the  universal  testimony  of  history  that  the  ag- 
gregation of  capital  is  indispensable  to  modern  prog- 
ress. There  is  no  phase  of  industrial  progress  which 
has  taken  place  without  it.  In  those  countries  where 
the  least  concentration  of  capital  has  occurred,  civili- 
zation is  most  backward  and  progress  most  sluggish. 
So,  too,  of  industries.  Those  industries  in  the  most 
advanced  countries  which  have  participated  least  in 
the  concentration  of  capital  have  made  the  least  prog- 
ress. Their  progress  has  been  less,  both  in  the  use 
of  wealth-cheapening  methods  and  in  the  social  effect 
upon  the  population.  There  is  no  phase  of  industrial 
life  anywhere,  in  any  country,  that  does  not  reveal 
this  characteristic, — witness  the  southern  states. 

During  the  last  twenty  years,  however,  a  new  phase 
of  the  corporate  form  of  industrial  organization  has 
appeared,  viz.,  the  trust.  Properly  speaking,  the 
trust  is  simply  a  larger  form  of  corporation.  It  is  the 
integration  of  smaller  corporations  into  one  enterprise, 
in  the  same  way  that  the  corporation  was  the  integra- 
tion of  individuals  into  one  enterprise.  It  is  against 
this  last  form  that  public  suspicion  is  now  directed,  and 
legislation  in  many  of  the  states  is  being  asked  for  and 
enacted.  It  is  important  in  this  connection  to  say 
that  trusts  proper,  i.  e.,  the  concentration  of  capital 
into  productive  corporations,  are  not  to  be  confounded 


76  TRUSTS  AND  THE   PUBLIC  « 

with  mere  trade  agreements,  like  the  steel  combine, 
the  nail  combine,  the  copper  combine,  wheat  corners, 
etc.,  whose  only  effect  is  to  put  up  or  keep  up  prices. 
Such  combines  are  not  an  increased  concentration  of 
productive  power,  but  only  an  increased  unanimity 
among  the  sellers  of  products  to  keep  up  or  put  up 
prices. 

Among  hona  fide  trusts,  which  are  genuine  integra- 
tions of  capital  into  larger  concerns  for  productive 
purposes,  the  opposite  effect  has  been  produced,  viz., 
an  improvement  in  the  product  and  a  lowering  of  the 
price.  In  speaking,  therefore,  of  the  large  accumu- 
lations of  capital,  I  wish  always  to  be  understood  to 
mean  large  concentration  of  capital  into  one  manage- 
ment for  productive  purposes.  Among  the  conspicu- 
ous examples  of  this  kind  of  aggregation  are  the 
Standard  Oil  trust,  the  sugar  trust,  and  the  cotton-seed 
oil  trust.  Of  a  similar  nature  are  the  great  railroad 
and  telegraph  corporations ^ 

Without  going  into  further  details,  it  is  manifest 
that  in  every  line  of  production  where  the  aggregation 
of  capital  has  increased,  for  permanent  productive  pur- 
poses, the  effect  has  been  to  improve  the  quality  of  the 
commodity  or  service  and  reduce  the  price  to  the  public. 
But  there  are  many  other  asj^ects  of  the  subject  in 
which  the  public  is  interested,  besides  the  matter  of 
prices  and  quality  of  commodities.  Among  these  are 
the  efifect  on  wages  and  the  permanency  of  employ- 
ment. 


1  The  data  which  here  followed  is  omitted  because  it  appears 
in  other  of  the  papers  in  this  volume,  particularly  Nos.  I,  XVI, 
and  XVII. 


LARGE  AGGREGATIONS   OF  CAPITAL  'Jf 

With  reference  to  wages  the  question  is  quite  simple. 
It  is  such  a  well  known  fact  as  only  barely  to  need 
stating,  that  these  large  concerns  never  tend  to  lower 
the  wages  in  the  industries  in  which  they  operate,  but 
on  the  contrary  always  pay  the  highest  prevailing 
wages.  In  all  the  industries  where  great  concentration 
of  capital  has  taken  place  the  wages  have  increased, 
except  in  particular  instances  where,  through  the  intro- 
duction of  machinery,  a  new  class  of  labor  has  been 
emplo3''ed,  as  substituting  women  for  men  and  young 
people  for  adults,  which  has  been  something  of  a  fea- 
ture throughout  the  whole  factory  system.  It  is  by 
this  process  that  so  many  new  occujDations  have  been 
opened  to  women. 

The  question  of  permanent  employment  is  scarcely 
less  important  than  that  of  wages.  Indeed,  the  uncer- 
tainty of  employment  is  one  of  the  most  baneful  effects 
of  modern  industry.  The  introduction  of  new  machin- 
ery and  the  tendency  to  overproduce  and  so  glut  the 
market  and  finally  compel  temporary  suspension  has 
been  one  of  the  constant  sources  of  industrial  and  social 
perturbation.  The  tendency  of  the  concentration  of 
productive  capital  is  one  of  the  most  effective,  if  not 
the  only,  means  of  remedying  this  constant  social  cala- 
mity. In  the  first  place,  the  larger  the  investment  of 
capital  the  greater  the  loss  from  any  interruption  of 
productive  activity.  The  expenses  are  so  enormous 
that  a  short  stoppage  in  many  instances  would  more 
than  neutralize  the  profits  of  a  whole  year.  Conse- 
quently, the  larger  the  concern  the  greater  the  effort 
accurately  to  adjust  its  productive  capacity  to  the 
market  demand  for  its  product,  so  as  to  avoid  loss  from 
interruption.    Industrial  depression  can  never  be  elimi- 


78  TRUSTS  AND   THE   PUBLIC 

nated  until  the  relation  of  productive  enterprise  to 
consumption  is  reduced  to  some  degree  of  intelligent 
precision,  which  the  small  go-as-you-please  producer 
can  never  do. 

The  essential  economic  features  of  large  aggrega- 
tions of  capital,  then,  are:  (1)  That  by  the  use  of  larger 
and  superior  methods  they  improve  the  quality  and  re- 
duce the  price  of  commodities :  (2)  They  are  more  favor- 
able than  smaller  concerns  to  an  increase  in  Avages  :  (3) 
By  introducing  scientific  precision  into  industry,  they 
tend  to  increase  the  permanence  of  employment  and  re- 
duce the  tendency  to  industrial  depression.  Manifestly, 
therefore,  the  tendency  to  large  aggregations  of  cap- 
ital in  productive  enterprise  is  economically  sound, 
socially  advantageous,  and  necessary  to  modern  prog- 
ress. 

We  now  come  to  the  second  part  of  the  question 
under  discussion,  viz. :  Under  what  limitations  this 
capitalistic  aggregation  should  go  on.  The  limitations 
to  economic  development  should  always  be  economic 
rather  than  political  or  statutory.  Statutory  restric- 
tions to  the  use  of  capital  involve  arbitrary  and  usually 
harmful  hindrance  to  the  free  mobility  of  economic 
forces.  These  restrictions  are  usually  the  result  of  an 
adverse  public  sentiment,  created  by  the  failure  of  the 
captains  of  industry  to  recognize  their  true  economic 
relation  to  the  community.  The  concentration  of  cap- 
ital, like  the  concentration  of  all  power  in  society,  in- 
volves the  surrender  of  a  certain  amount  of  productive 
individuality  in  the  community.  This  can  never  be 
justifiable,  nor  will  it  permanently  be  tolerated,  unless 
it  results  in  giving  to  the  community  a  full  equivalent 
in  greater  economic  advantages. 


LARGE  AGGREGATIONS  OF  CAPITAL  79 

The  economic  law  of  permanent  productive  integra- 
tion is  that  increased  concentration  of  capital  and 
power  in  fewer  hands  is  economically  justifiable  and 
socially  tolerable  only  on  the  condition  of  improved 
services  to  the  community,  in  better  quality  or  lower 
prices  of  what  is  furnished.  Profits  are  the  legitimate 
reward  of  capitalistic  enterprise ;  but  they  should 
always  be  obtained  by  exploiting  nature  through  im- 
proved methods,  and  never  by  exploiting  the  com- 
munity through  higher  prices.  The  failure  of  cap- 
italists to  recognize  this  principle  as  the  inexorable 
economic  law  of  their  existence  is  sure  to  bring  social 
antagonism  which  will  result  in  some  form  of  arbi- 
trary, uneconomic  restrictions,  detrimental  alike  to 
capital  and  the  community.  Capitalists  who  imagine 
that  any  amount  of  accumulated  wealth  can  enable 
them  to  defy  this  social  law  are  greatly  mistaken,  and 
sooner  or  later  will  have  to  pay  the  penalty  by  the 
arrest  of  their  progress,  if  not  by  the  entire  disposses- 
sion of  their  present  industrial  opportunities. 

The  present  anti-trust  movement  throughout  the 
country  is  the  result  of  a  disregard  by  capitalists  of 
this  economic  law  of  productive  integration.  The  un- 
economic combines  already  referred  to,  which  are  a 
constant  violation  of  this  principle,  coupled  with  other 
political  and  social  disturbances,  have  tended  to  create 
a  public  sentiment  against  accumulated  capital,  ^^er  se. 
As  is  always  the  case  in  social  revolts,  the  genuine 
are  arraigned  with  the  spurious  and  all  are  put  under 
the  ban. 

Any  legal  restrictions,  in  the  sense  of  limiting  the 
amount  of  capital  used  by  a  single  concern,  would  be  a 
fatal  obstruction  to   economic  progress.     Instead   of 


80  TRUSTS  AND   THE  PUBLIC 

applying  arbitrary  limitation  to  the  aggregation  of 
capital,  the  real  reforms  to  be  sought  are  in  the  educa- 
tion of  the  capitalist  and  the  public  in  regard  to  the 
true  relation  of  capital  to  the  community. 


TI. 
FACTS  FKOM  THE  OIL  REGIONS  * 

Pkobably  there  is  no  concern  in  the  world  which  is 
the  subject  of  so  much  suspicion,  and  psychological  as 
well  as  industrial  antagonism,  as  the  Standard  Oil 
Company.  People  who  know  nothing  whatever  of  the 
oil  business,  of  the  industry,  history,  methods  or  results 
of  the  company,  feel  perfectly  competent  to  pass 
judgment,  always  of  course  against  the  trust.  This 
company  seems  to  occupy  very  much  the  same  position 
in  the  industrial  sentiment  of  the  community  that 
Satan  does  in  the  atmosphere  of  theology.  It  is 
regarded  as  the  evil  genius,  which  is  the  cause  of  all 
the  bad  and  none  of  the  good  in  the  oil  industry. 

We  have  had  occasion  several  times  to  discuss  at 
length  the  economic  effects  of  the  Standard  Oil  Com- 
pany on  the  petroleum  industry.  Heretofore,  how- 
ever, we  have  considered  the  question  only  on  the  side 
of  the  manufactured  article — refined  oil — the  reason 
for  this  being  that  public  discussion  has  been  devoted 
mostly  to  that  side  of  the  subject.  The  law-suits, 
legislative  investigations,  and  practically  all  anti-trust 
schemes  and  literature,  have  been  directed  against  the 
"  monopoly  "  in  oil  refining. 

It  would  be   a  mistake  to  assume,  however,  that 

*  Published  in  Otintori's  Magazine  of  September  1897. 
6  81 


82  TRUSTS  AND   THE   PUBLIC 

the  Standard  Oil  Company  has  no  enemies  among  the 
producers.  One  has  only  to  go  into  the  oil  regions 
and  spend  a  little  time  among  the  people  in  the  land 
of  derricks  to  learn  that  the  crushing  hand  of  the 
trust  is  also  upon  every  producer  of  crude  petroleum ; 
that  every  man  who  has  a  well  on  his  farm,  in  his 
back  3^ard,  or  at  his  front  door,  is  being  robbed  day  and 
night  and  Sundays  by  the  Standard  Oil  Company. 

At  first  it  is  difficult  to  resist  the  impression  that 
there  must  be  considerable  truth  in  this  universal 
indictment.  Such  places  as  Allentown,  Bolivar  and 
Richburg,  ]^.  Y.,  show  all  the  symptoms  of  industrial 
despair  and  social  decline.  Most  of  the  buildings  were 
never  touched  by  a  paint  brush  and  there  are  almost 
none  that  ever  had  the  freshening  influence  of  a  second 
coat.  Dirt,  neglect,  broken  windows,  depleted  door- 
steps, moral  inertia,  and  an  utter  lack  of  social  life 
and  personal  energy,  characterize  the  entire  region. 
It  looks  as  if  the  hard  hand  of  adversity  had  visited 
every  household,  and  all  this  is  attributed  to  the 
Standard  Oil  Company,  and  generally  believed  by  the 
public. 

The  facts  connected  with  the  production  of  crude 
petroleum,  which  are  little  known  to  the  public, 
represent  an  extraordinary  set  of  industrial  conditions. 
Through  its  immense  development,  the  Standard  Oil 
Company  has  become  practically  the  only  purchaser 
of  crude  oil.  In  some  of  the  oil  fields,  conspicuously 
those  of  Allegany  county.  New  York,  it  has  not  only 
become  the  purchaser  of  the  product  but  it  has  finally 
become  the  practical  surety  of  every  small-well  owner, 
so  that  they  are  not  undersold  or  driven  out  of 
business  by  more  successful  competitors.    But  for  the 


FACTS  FROM  THE   OIL  REGIONS  83 

influence  exercised  by  the  Standard  Oil  Company, 
fully  a  quarter  and  probably  a  half  of  the  smaller-well 
owners  in  the  Allegany  field  would  long  ago  have  been 
forced  out  of  business,  and  the  income  from  their  one, 
two,  three- barrel  a  day  wells  been  entirely  cut  off. 

The  oil  producing  industry  is  unique.  There  is  noth- 
ing like  it  in  any  other  line  of  human  effort.  With 
the  exception  of  sinking  the  well  and  finding  the  oil, 
it  affords  an  almost  automatic  income  without  effort, 
responsibility,  or  hardly  any  care.  All  an  oil  producer 
has  to  do  is  simply  to  furnish  the  well  and  the  Stand- 
ard Oil  Company  will  do  all  the  rest.  The  trust  owns 
the  pipe  lines  that  convey  the  oil  from  the  wells  to  the 
refineries.  When  a  producer  sinks  a  well  and  finds 
oil,  all  he  has  to  do  is  to  notify  the  company  and  it 
will  lay  the  pipe  connecting  it  with  his  tank,  bear  all 
the  expense  of  transportation,  and  take  all  the  product 
whether  it  needs  it  or  not.  The  well  owner  simply 
has  a  tank  into  which  he  pumps  his  oil,  and  as  fast  as 
he  pumps  it  he  can  let  it  into  the  trust  pipes  and  draw 
his  money.  The  trust  sustains  about  the  same  relation 
to  the  well  owner  that  the  government  would  to  the 
silver-mine  owner  under  the  free  coinage  of  silver, 
namely,  takes  all  the  product,  regardless  of  how  much 
it  is  or  whether  it  is  needed,  and  pays  "  spot  cash  "  for  it. 
There  is  no  other  industry  in  the  world  where  the  pro- 
ducers have  such  absolutely  unlimited  market,  such  ease 
of  sale  and  such  complete  guarantee  against  loss.  No 
agents  or  drummers  are  needed  ;  not  even  skill  in  bar- 
gaining is  necessary.  The  most  ignorant  well  owner 
can  sell  his  product  and  get  the  same  price  for  it  as  the 
most'  skilful  operator.  In  fact,  the  trust  completely 
protects  them  from  all  the  risks  of  ordinary  commerce 


84  TRUSTS  AND   THE  PUBLIC 

and  assumes  all  the  reponsibility  of  the  entire  industry 
itself.  The  producers,  strange  to  say,  seem  to  be 
about  as  ignorant  of  the  economics  of  the  oil  business 
as  is  an  ordinary  city  merchant,  imagining  that  they 
are  robbed  by  the  arbitrary  fixing  of  the  price  of  the 
oil ;  they  insist  that  the  price  is  fixed  by  the  trust  at 
whatever  point  it  pleases. 

As  a  matter  of  fact,  nothing  of  the  kind  occurs.  If 
such  were  the  case,  it  is  needless  to  say  that  the  trust 
would  put  the  price  verj''  much  lower  than  it  is ;  prac- 
tically give  nothing  for  the  oil.  Crude  oil  has  been  as 
high  as  six  dollars  a  barrel.  Since  the  trust  was  organ- 
ized the  price  has  been  nearly  four  dollars,  frequently 
between  two  and  three  dollars  a  barrel.  Why  does 
the  trust  give  nearly  three  dollars  a  barrel  atone  time 
and  less  than  seventy  cents  at  another  ?  Why  does  it 
not  give  seventy  cents  all  the  time  ?  The  simple  an- 
swer is  that  it  cannot  get  the  supply  at  that  price. 
Despite  the  trust  and  all  its  monopolistic  powers,  the 
price  of  crude  oil  is  governed  by  economic  conditions 
over  which  neither  the  well-owners  nor  the  trust  have 
arbitrary  control.  Of  course,  the  conditions  are  dif- 
ferent from  those  in  any  other  industry  because  the 
Standard  Oil  Company  assumes  a  responsibility  which 
is  assumed  by  the  purchasers  of  no  other  commodity. 
In  no  other  industry  are  there  either  individual  or  col- 
lective interests  which  stand  ready  under  all  circum- 
stances to  take  the  entire  product,  regardless  of  the 
market  demand.  This  the  Standard  Oil  Company 
does,  and  when  there  is  more  than  is  needed  it  stores 
it,  and  in  so  doing  it  relieves  the  well  owners  of  all 
contingent  responsibility.  If  this  were  not  done,  when- 
ever there  was  more  oil  produced  than  was  required 


FACTS   FROM   THE   OIL   REGIONS  8$ 

the  well  owners  would  have  to  store  it  or  sell  at  a 
sufficiently  lower  price  to  pay  some  one  else  to  store 
it.  In  that  case  the  price  would  be  governed  by  the 
cost  of  the  dearest  portion  that  the  market,  under 
those  competitive  conditions,  would  take,  and  when 
it  was  too  much  some  would  remain  unsold. 

This  competitive  element  being  taken  out  of  the 
market  by  the  Standard  Oil  Company  standing  ready 
to  take  the  entire  product  causes  the  economic  forces 
affecting  prices  to  operate  in  a  different  way.  Under 
the  present  arrangement,  the  trust  cannot  refuse  to 
buy  when  it  does  not  need,  hence,  when  the  supply 
is  greater  than  the  demand  and  stock  is  being  accumu- 
lated, the  trust  materially  lowers  the  price  it  will  give; 
that  is  to  say,  it  will  still  take  all  the  product  but  at 
a  lower  price ;  and,  if  the  demand  is  pressing  hard 
against  the  supply,  it  will  pay  higher  prices  so  as  to 
induce  greater  risk  in  sinking  new  wells  to  furnish 
an  adequate  supply.  The  trust  stands  in  relation  to 
crude  oil  very  much  as  the  Bank  of  England  does  to 
gold.  When  it  needs  a  greater  supply  of  gold  it  raises 
the  rate  of  discount ;  and  when  there  is  more  than  is 
needed  it  lowers  the  rate  of  discount,  but  it  always 
takes  all  that  comes.  It  is  thus  easy  to  see  that  such 
an  excess  of  suppl}'-  would  involve  a  great  loss  in  stor- 
age, consequently  the  Standard  offers  a  lower  price. 

This  is  not  due  to  anything  the  trust  does  or  can  do  ; 
it  is  due  to  the  prolific  output  of  the  West  Virginia  field. 
The  new  wells  in  West  Virginia  are  each  yielding  from 
one  hundred  to  six  hundred  barrels  a  day.  Under  the 
ordinary  competitive  conditions  of  purchase,  with  such 
an  output,  only  what  is  needed  being  taken  and  the 
dealers  fixing  the  price,  a  very  large  number  of  single- 


86  TRUSTS  AND   THE   PUBLIC 

barrel  vrells  in  Allegany  would  go  out  of  use  because 
the  more  prolific  wells  could  supply  the  whole  demand 
and  could  lower  the  price  sufficiently  to  undersell  the 
producers  with  the  small  wells.  But,  since  the  Standard 
will  take  all  that  is  produced,  the  single-barrel  wells 
can  sell  their  product  the  same  as  the  six  hundred- 
barrel  wells.  In  other  words,  the  small  producers 
cannot  be  crowded  out  by  competition,  so  that  in 
reality  it  is  not  the  trust  that  is  now  fixing  the  price 
of  oil  at  seventy-three  cents  ^  but  the  prolific  wells  of 
Virginia.  Thus  the  law  of  cost  of  production  oper- 
ates, despite  the  seeming  monopoly  of  the  purchaser, 
and  operates  the  same  on  crude  oil  as  on  silver  or 
wheat  or  any  other  product.  From  this  there  is  no 
final  escape,  but  the  well  owners  in  the  Allegany  fields 
imagine  that  because  oil  was  once  three  and  four  dollars 
a  barrel  and  is  now  only  seventy-three  cents,  there- 
fore the  trust  has  arbitrarily  reduced  the  price  b}'"  that 
amount.  They  seem  to  know  nothing  of  the  economic 
effect  of  the  "West  Yirginia  oil  fields  on  the  price  of  their 
product.  Instead  of  the  trust  being  the  enemy,  con- 
sciously or  otherwise,  of  the  smaller-well  owners  in  Al- 
legany, it  is  in  reality  their  best  and  almost  only  friend, 
for  if  the  trust  were  out  of  the  way  and  free  competi- 
tive conditions  prevailed  many  of  the  small-well  owners 
would  be  driven  entirely  from  the  field.  For  instance, 
if  the  one-barrel-well  owners  had  to  furnish  storage 
for  their  own  product,  transport  it  themselves  and  then 
run  the  risk  of  selling  it  in  competition  with  owners  of 
the  more  prolific  wells,  the  cost  of  handling  their  small 
amount  would  be  more  than  the  price  that  they  could 

1  At  present,  August  1889,  the  price  of  crude  oil  has  gone  up 
to  $1.27  per  barrel. 


FACTS  FROM   THE   OIL   REGIONS  87 

get  for  it.  It  is  only  because  the  trust  furnishes  all 
the  storage  and  transportation,  and  stands  ready  at  all 
times  to  buy  all  the  product  that  these  small-well 
owners  can  furnish,  that  they  are  able  to  stay  in  the 
field  at  all.  As  a  matter  of  fact,  they  are  a  surplus 
quantity  which  competition  would  drive  out ;  nothing 
but  the  economic  paternalism  of  the  trust  keeps  them 
in  existence.  Yet  curiously  enough,  it  is  the  small- 
well  owners  and  not  the  large  ones  who  think  the 
trust  is  robbing  them. 

It  is  not  at  all  clear,  however,  that  this  is  a  good 
thing.  It  is  quite  certain  that  in  the  natural  order  of 
competitive  evolution  a  large  number  of  the  small- 
well  owners  would  be  rendered  economically  useless 
and  be  eliminated.  They  would  be  compelled  either 
to  move  into  the  new  fields  and  be  a  part  of  the  live,  ac- 
tive movement,  or  disappear,  but  for  this  somewhat  ab- 
normal method  of  the  trust  in  buying  all  the  product, 
whether  needed  or  not.  It  probably  would  be  better 
for  society  if  they  were  gradually  eliminated  by  the 
competitive  process,  as  they  would  be  from  farming, 
manufacture,  commerce  or  any  other  industry,  than  to 
be  perpetuated  by  uneconomic  conditions. 

The  effect  of  this  is  clearly  seen  in  the  social  condi- 
tion of  these  economic  back-numbers.  Under  the  pres- 
ent system  of  a  guaranteed  market  for  the  whole  prod- 
uct, oil  production  is  reduced  to  an  almost  automatic 
process.  The  owner,  for  instance,  of  a  one-barrel  well 
is  as  completely  assured  of  remaining  in  the  market  as 
the  owner  of  a  six  hundred-barrel  well.  The  one-bar- 
rel well  will  yield  nearly  three  hundred,  dollars  a  year. 
This  income  being  guaranteed  by  the  trust  against  all 
competition,  the  owner  is  relieved  from  all  economic  re- 


88  TRUSTS   AND   THE   PUBLIC 

sponsibility  and  resigns  himself  to  a  mode  of  life  that 
will  eke  out  existence  on  this  small  income. 

Whatever  else  may  be  said  against  the  Standard 
Oil  Company,  it  cannot  be  charged  with  crowding  out 
the  small  producers.  On  the  contrary,  it  is  the  only 
power  that  perpetuates  their  existence.  "Were  they 
exposed  to  the  full  force  of  competition,  they  would 
soon  be  annihilated  or  compelled  to  keep  pace  in  the 
thrifty  march  of  progress.  Allen  town,  Bolivar  and 
Richburg  are  monuments  of  industrial  sloth  and  social 
indifference  which  are  the  result  of  the  perpetuation 
of  uneconomic  misfits.  The  effect  is  bad  alike  on  the 
individual  and  the  community,  without  in  the  least 
benefiting  the  industry.  The  real  trouble  with  oil 
producers  is  that  they  have  been  shielded  by  the  trust 
from  the  normal  competitive  influence  of  industrial 
evolution. 

The  only  remedy  for  their  condition  is  to  apply  the 
same  concentration  of  capital  to  oil  ownership  that  has 
taken  place  in  the  refining.  Instead  of  the  Standard 
Oil  Company  giving  place  to  a  multitude  of  small 
refiners,  the  true  movement  would  be  for  the  trust  or 
some  other  similarly  large  concern  to  concentrate  and 
organize  under  one  or  a  few  large  companies  the 
entire  crude  oil  industry.  Then  the  shiftless  hangers- 
on  would  be  forced  into  the  column  of  w^age  workers 
and  the  energy  and  discipline  of  progressive  influences 
would  spur  them  on  to  some  degree  of  industrial  and 
social  activity.  Small-well  owners  at  present  are 
really  in  the  hand  labor  era  of  industr}^,  and  are  lag- 
ging behind  in  the  general  progress  of  society  through 
the  barbarizing  influences  that  crude  life  and  hand 
methods  always  entail. 


YII. 

TKUSTS   VERSUS  THE  TOWN* 

Editor  Gunton's  Magazine  : 

The  unequivocal  industrial  tendency  to-day  is  toward 
the  so-called  trust.  Newspaper  notices  give  almost 
daily  evidence  of  this  fact,  and  the  sharp  competition 
for  the  world's  markets  by  American  manufacturers 
makes  a  closer  division  of  labor  and  a  larger  invest- 
ment of  capital  of  first  necessity.  The  most  natural 
thing  to  do  is  to  form  a  trust  and  thereby  secure  both. 
That  the  trust  idea  is  commercially  successful  needs  no 
demonstration.  In  fact,  where  feasible  at  all,  it  is  the 
only  way  open  to  large  success.  There  is  no  gain- 
saying the  fact  that  it  is  based  on  the  true  economic 
principle  and  has  therefore  come  to  stay,  and  is  the 
legitimate  outcome  of  its  predecessor,  the  factory 
system.  It  is  also  peculiarly  American,  and  is  more 
nearly  an  industrial  democracy  than  any  other  form 
of  commercial  institutions.  It  is  democratic  because 
it  represents  the  investments  of  many,  and  the  many 
elect  the  officers  who  are  in  control  and  who  for  in 
efficiency  or  malfeasance  may  be  removed  from  office. 
It  is  democratic  because  it  does  not  promise  any  hered- 
itary descent  in  the  control  of  affairs. 

*  Letter  from  correspondent,  and  editorial  comment,  published 
in  Gunton's  Magazine  of  September  1898. 

89 


90  TRUSTS   AND   THE   PUBLIC 

But  while  we  may  not  ignore  this  tendency  or  fail 
to  admit  the  logic  of  this  is  trend,  we  must  look  with 
apprehension  on  its  effect  upon  the  many  manufactur- 
ing hamlets  with  which  the  country  is  dotted  and 
which  so  greatly  aid  the  agricultural  interests  of  our 
eastern  and  middle  states.  The  trust  necessarily  seeks 
a  commercial  and  financial  center,  a  large  and  wealthy 
city  where  it  is  daily  in  touch  with  the  pulse  of  trade 
and  finance.  It  means,  then,  abandonment  of  the 
smaller  factories  in  the  rural  towns  and  withdrawal  of 
the  employees  who  are  the  tenants  of  the  houses  of 
which  the  town  is  built,  patrons  of  the  local  stores, 
and  consumers  of  the  products  of  the  local  farms, 
leaving  the  thrifty  manufacturing  village  an  empty 
distributing  point  for  rural  necessities  which  are 
obviously  sold  to  the  farmers  at  a  higher  price,  while 
their  product  is  bought  at  a  much  lower  price  on 
account  of  the  transportation  charges  anticipated  to 
get  it  to  the  consumer. 

That  this  is  appreciated  by  the  people  is  evident 
from  the  fact  that  much  investigation  into  and  legis- 
lation against  trusts  is  engaging  their  representatives 
in  the  legislatures  of  the  various  states,  but  the  im- 
mediate effect  *will  not  be  fully  appreciated  by  those 
most  interested  until  too  late.  The  trust  not  only 
produces  an  article  for  less  cost  than  the  small  manu- 
facturer but  it  goes  farther.  It  seeks  to  reduce  the 
cost  of  distribution  by  omitting  the  jobber  and  in 
many  instances  the  retail  dealer,  and  selling  through 
its  own  channels  directly  to  the  consumer  wherever 
possible,  thus  saving  to  itself  the  profits  of  both.  By 
the  change  then  not  only  the  farmer  but  the  country 
merchant,  the  country  bank,  and  the  village  property 


TRUSTS  VERSUS  THE  TOWN  9I 

holder  are  all  alike  menaced.  Farmers  of  the  eastern 
and  middle  states  have  known  something  of  the  reduc- 
tion in  land  values  produced  by  the  opening  and  oper- 
ating of  large  tracts  of  farm  lands  in  a  large  way  in 
the  West  and  South-West,  and  the  cheapened  product 
therefrom,  aided  by  the  improved  and  cheapened 
transportation,  but  such  reduction  is  onlj'-  a  frac- 
tion of  what  is  to  come  with  the  industrial  chansfes 
now  in  progress.  Those  towns  which  are  the  happy 
possessors  of  from  six  to  twenty  thriving  manufacto- 
ries employing  from  50  to  200  or  300  hands  each  should 
guard  them  jealousl}^  and  the  farmers  who  have  derived 
thrift  therefrom  should  lend  their  aid  so  far  as  may  be 
to  their  maintenance.  These  factories  not  only  make  a 
profitable  home  market,  give  value  to  real  estate  and 
thrift  and  population  to  a  town,  but  the}^  also  pay  a 
large  percentage  of  the  taxes,  which  would  not  be  not- 
ably lessened  by  their  loss  but  would  have  to  be  added 
to  the  burdens  of  others.  How  far-reachins:  the  change 
wull  be  time  will  tell,  but  its  effect  cannot  be  doubted. 
The  town  has  a  fight  for  self-preservation  against  the 
trust,  and  should  be  fully  awake  to  the  menace  of  what 
will  come  if  it  loses  in  the  contest. 

C.  D.  Chambeelin. 


Mr.  Chamberlin  raises  a  good  point  and  one  that 
deserves  serious  consideration.  What  he  says  in  re- 
gard to  the  inevitable  industrial  tendency  towards 
trusts,  and  the  advantages  to  come  from  that  move- 
ment, is  quite  in  accord  with  the  views  of  this  maga- 
zine ;  nevertheless,  it  is  of  great  importance  that  the 
growth  of  towns  and  cities  all  through  the  country,  par- 
ticularly in  the  great  rural  sections,  shall  steadily  pro- 


92  TRUSTS   AND   THE   PUBLIC 

ceed,  because  it  is  from  these  centers  that  the  moving 
forces  of  progressive  civilization  radiate.  Conse- 
quently, if  it  were  true,  as  Mr.  Chamberlin  thinks,  that 
the  smaller  towns  and  cities  are  being  killed  off  by  the 
growth  of  trusts,  a  serious  problem  would  be  presented 
and  some  legislative  restriction  of  the  trust  movement 
might  be  justifiable.  The  question  should  be  looked 
into  thoroughly  and  discussed  with  entire  fairness. 

There  is  no  doubt  that  the  last  two  decades  have 
witnessed  the  relative  decline  of  a  certain  class  of  small 
towns  in  the  old-settled  portions  of  the  country,  chiefly 
the  East.  Neither  is  there  any  doubt  that  much  of 
this  is  chargeable  to  the  modern  tendency  towards  con- 
centration. The  beginning  of  this  change  was  wrought 
by  the  railroads.  "Wherever  and  as  fast  as  steam 
transportation  took  the  place  of  wagons  or  stages  in 
any  given  section  of  the  country,  the  fate  of  all  manu- 
facturing towns  not  on  the  line  of  the  road  was  sealed. 
Manufacturing,  therefore,  tended  more  and  more  to 
localize  itself  along  the  railroads  and  the  non-railroad 
towns  relapsed  into  agricultural  communities.  The 
next  step  was  a  natural  continuation  of  the  same  move- 
ment. Certain  kinds  of  industries  can  be  conducted 
much  more  economically  and  profitably  in  large  estab- 
lishments than  in  small ;  hence,  many  of  the  small 
concerns  of  this  class,  even  though  located  on  railway 
lines,  found  it  difficult  to  compete  with  the  more  exten- 
sive plants  that  had  naturally  grow^n  up  in  the  larger 
towns  and  cities,  and  thus  were  gradually  compelled 
either  to  withdraw  from  busmess  or  consolidate  and  go 
to  larger  towns  themselves.  It  is  quite  true,  therefore, 
that  certain  lines  of  industry  have  been  steadily  center- 
ing in  the  large  towns  and  cities. 


TRUSTS  VERSUS  THE  TOWN  93 

But  is  this  movement  chargeable  especially  to  the 
trust?  ISTot  at  all.  It  is  due  to  the  general  concen- 
trating tendency  of  which  trusts  are  merely  one  phase. 
In  fact,  the  trust  integration  seldom  takes  place  until 
after  the  industries  affected  by  it  have  already  migrated 
from  the  villages  to  the  large  towns.  The  railroads 
and  competition  of  larger  concerns  were  and  are  re- 
sponsible for  that  movement,  while  the  trust  is  simply 
an  organization  of  already  established  concerns  and 
often  does  not  involve  changing  the  location  of  fac- 
tories at  all.  In  some  cases  of  course  it  means  closing 
up  the  smaller  and  extending  the  larger  plants,  but 
clearly  this  is  simply  a  continuation  of  the  earlier 
movement  and  is  chargeable,  not  specifically  to  the 
trust,  but  to  the  entire  general  trend  to  which  we  have 
referred.  The  problem  therefore  becomes  a  much 
broader  one  than  that  merely  of  "  Trusts  versus  the 
Town."  It  expands  into  the  larger  question  of  whether 
or  not  the  whole  modern  trend  of  industry  is  hinder- 
ing the  multiplication  and  growth  of  towns  and  cities 
throughout  the  country. 

So  far  from  that  being  true,  the  facts  show  that  the 
trend  is  exactly  the  other  way.  According  to  the 
Eleventh  Census,  the  number  of  cities  in  the  United 
States  increased  from  141  in  1860  to  448  in  1890,  and 
of  these  new  communities  187,  or  60  per  cent.,  were 
places  of  between  8,000  and  20,000  population — hardly 
more  than  large  towns.  The  greatest  gain  of  all  was 
in  towns  of  between  8,000  and  12,000  population  ;  these 
increased  from  62  to  176  in  the  three  decades.  Cities 
of  from  12,000  to  20,000  population  increased  from  34 
to  107 ;  20,000  to  40,000,  from  23  to  91,  and  so  on. 
There  was  only  one  city  of  between  500,000  and  1,000,- 


94  TRUSTS   AND   THE   PUBLIC 

000  population  in  1860,  and  one  in  1890.  Not  until 
1880  were  there  any  cities  of  over  1,000,000 ;  there 
was  one  of  that  class  in  1880,  three  in  1890. 

It  is  clear,  therefore,  that  the  growth  in  the  number 
of  small  towns  and  cities  has  been  pronounced,  and 
that,  instead  of  the  small  localities  being  killed  off  by 
the  larger,  it  is  among  these  very  towns  of  from  8,000 
to  12,000  inhabitants  that  the  principal  gain  has  taken 
place.  The  total  increase  of  307  consisted,  of  course, 
of  small  places  which  passed  from  below  to  above  the 
8,000  mark  during  the  three  decades.  All  this  occurred, 
it  should  be  remembered,  during  the  period  of  most 
marked  concentration  in  industry. 

If,  however,  the  growth  of  railroads  and  concentra- 
tion of  industry  has  resulted  in  the  decline  of  a  certain 
class  of  small  towns,  how  can  this  general  increase  be 
explained  ?  Chiefly,  we  believe,  by  the  fact  that  prac- 
tically all  the  decline  has  been  in  the  case  of  towns  of 
insignificant  population — say  of  less  than  3,000  or  4,000 
— and  this  has  been  much  more  than  offset  by  the  mul- 
tiplication and  growth  of  towns  of  5,000  to  10,000  and 
upwards.  Thus,  if  the  little  industries  of  a  group  of 
small  villages  should  gradually  center  in  one  of  those 
villages,  the  latter  would  soon  become  a  large  town  and 
be  included  in  the  census  list,  while  before  none  of  these 
places  would  have  been  recorded  either  as  towns  or 
cities.  Hence,  in  the  older  sections  of  the  country,  for 
each  new  town  added  to  the  list  of  places  exceeding 
8,000  inhabitants  there  may  be  two  or  three  or  more 
smaller  places  left  in  a  static  or  declining  condition. 
The  census  statistics  for  places  of  from  1,000  to  2,500 
population  confirm  the  statement  as  to  the  stagnation 
or  decline  of  very  small  towns  in  eastern  states. 


TRUSTS  VERSUS  THE  TOWN  95 

Throughout  the  West  the  case  is  different.  There 
small  towns  and  large  (except  the  "  boom  towns  "  of  a 
few  years  ago)  are  steadily  growing.  Most  of  these 
places  have  come  into  existence  since  the  new  conditions 
of  concentrated  industry  were  established  and  hence  are 
making  use  of  instead  of  suffering  by  these  conditions. 
Only  such  industries  as  are  capable  of  success  in  rela- 
tively small  places  are  being  located  in  the  towns  of 
the  West,  and  that  region  is  not  being  built  up  with 
thousands  of  little  agricultural  communities,  as  was 
done  in  the  East  before  the  modern  industrial  era  came 
in.  Thus,  while  some  of  the  small  towns  of  the  West 
may,  hereafter,  recede  before  their  stronger  neighbors, 
the  movement  cannot  possibly  be  so  Avidespread  and 
significant  as  it  has  been  throughout  the  old  states  of 
New  England  and  the  Atlantic  seaboard. 

There  is  every  indication,  however,  that  towns  of 
5,000  to  10,000  and  upwards  will  continue  to  thrive  and 
increase  in  number.  In  the  first  place,  while  many 
lines  of  industry  must  be  carried  on,  nowadays,  in 
large  establishments,  it  does  not  follow  that  such  con- 
cerns will  tend  to  locate  themselves  in  very  large  cities ; 
indeed,  to  avoid  heavy  taxation  and  rent  they  tend 
more  and  more  to  seek  towns  and  cities  of  moderate 
size.  Good  railroad  facilities  make  this  possible,  and 
thus  we  see  that  while  railroads  were  at  first  the  means 
of  drawing  village  industries  into  larger  towns,  they 
are  now  becoming  the  strongest  force  to  keep  such  in- 
dustries from  going  into  the  great  cities.  Moreover, 
the  economic  tendency  is  and  w^ill  be  more  and  more 
for  manufacturing  industries  to  locate  themselves  near 
the  sources  of  raw  material,  because  transportation  of 
finished  commodities  is  relatively  much  more  econom- 


96  TRUSTS   AND   THE   PUBLIC 

ical  than  of  bulky  raw  products  containing  a  great 
amount  of  waste.  This  means  that  manufacturing  will 
steadily  diffuse  itself  throughout  the  country,  accord- 
ing to  the  geographical  distribution  of  natural  re- 
sources ;  while  the  very  large  cities  will  become  more 
exclusively  mercantile,  commercial,  financial  and 
general  distributive  centers. 

Look  wherever  we  will  the  facts  confirm  this  theory. 
Most  of  the  manufacturing  in  New  England,  of  cot- 
ton and  woolen  goods,  boots  and  shoes,  paper,  cutlery, 
bicycles,  etc.,  except  in  Massachusetts  and  Rhode 
Island,  is  carried  on  in  towns  of  from  5,000  to  25,000 
inhabitants ;  and,  in  the  two  excepted  states  even,  in 
places  of  less  than  50,000  or  75,000.  The  cotton  in- 
dustry is  going  South,  near  the  raw  cotton ;  woolen 
manufacture  will  eventually  move  westward,  near  the 
raw  wool ;  in  both  cases  establishing  industrial  com- 
munities in  those  sections.  Iron  is  manufactured 
near  the  iron  mines,  furniture  (very  much  of  it)  near 
the  forests  of  Michigan,  fiour  near  the  wheatfields  of 
Minnesota,  raw  sugar  on  the  plantations.  In  time, 
most  of  the  refining  of  sugar  Avill  undoubtedly  be  done 
near  the  sources  of  its  production. 

Another  important  fact.  New  industries  are  con- 
tinually coming  into  existence,  and  the  vast  majority 
of  these  establish  themselves  in  relatively  small  towns 
or  cities,  because  they  cannot  begin  on  a  sufficiently 
large  scale  to  command  success  in  a  large  city. 
Some  of  these  may  finally  move  to  the  cities,  but,  with 
the  progress  of  invention,  still  other  enterprises  are 
continually  being  established,  and  may  be  counted 
upon  as  a  permanent  reliance  of  the  small  town. 

Thus  from  every  point  of  view  the  steady  multiplica- 


TRUSTS   VERSUS   THE   TOWN  97 

tion  and  prosperity  of  most  towns  and  cities  of  from 
5,000  and  10,000  population  upwards,  seems  to  be  as- 
sured. Villages,  especially  in  the  East,  which  have 
not  reached  that  point  and  cannot  reach  it,  will  prob- 
ably remain  static  or  decline.  Since  their  places  are 
being  taken  by  an  increasing  number  of  larger  centers, 
this  decline  of  small  villages  need  not  necessarily  be 
considered  a  calamity.  From  a  sentimental  or  a  local 
standpoint  it  may  perhaps  be  deplored,  but  the  nation's 
interest  is  not  in  the  mere  preservation  of  little  cross- 
roads hamlets  but  in  the  increase  and  distribution  of 
communities  sufficiently  large  and  complex  to  exert 
a  genuine  socializing  influence  on  its  inhabitants  and 
the  surrounding  country.  It  is  hardly  possible  to  get 
much  of  this  influence  in  a  place  of  less  than  10,000 
inhabitants ;  with  a  smaller  number  there  is  not 
enough  complexity  of  interests,  variety  of  ideas  and 
social  intercourse,  nor  a  sufficient  basis  for  first-class 
educational  facilities  and  public  improvements.  The 
drawing  together  of  industries,  therefore,  in  such  a 
way  as  to  increase  the  number  of  moderately  large 
towns  and  small  cities  is  an  advantage  to  the  whole 
country,  even  if  the  small  villages  do  cease  to  be  centers 
of  industry  and  trade. 

But  it  is  not  to  be  assumed  that  the  small  villages 
will  be  entirely  wiped  out,  even  though  many  of  them 
may  lose  a  part  of  their  population.  Certain  kinds  of 
industries  will  always  be  found  in  these  small  villages, 
such  as  lumber  and  planing  mills,  grist  mills,  barrel 
factories,  cheese  and  fruit-canning  factories,  creameries, 
carriage  shops,  and  repairing  establishments  of  various 
kinds.  Many  of  these  villages,  also,  will  probably  be 
transformed  into  residence  places,  educational  centers 


98  TRUSTS  AND    THE   PUBLIC 

and  summer  resorts, — witness  the  fine  old  towns  of 
New  England.  Others  will  form  the  nuclei  oi  future 
agricultural  towns,  in  which  the  farmers  will  live  and 
go  out  to  their  work  every  day.  Improvement  of 
country  roads  and  more  general  use  of  farm  machin- 
ery, permitting  shorter  hours  of  labor,  will  contribute 
to  this  result  ;  eventually,  the  trolley  will  probably  be 
used  for  this  purpose,  just  as  it  is  now  employed  to 
take  cit}^  workers  into  suburban  districts  at  night. 

The  modern  trend  of  industry  is  producing  two  dis- 
tinct results — cheaper  wealth  and  higher  wages;  in 
other  words,  increased  consuming  power  of  the  masses 
of  the  people.  This  increased  consuming  power  means 
a  larger  effective  demand  for  the  products  of  industry 
— hence  more  factories  and  more  factory  towns. 
Trusts  do  not  affect  new  industries  at  first,  and  many 
kinds  of  manufacturing  are  never  reached  by  the  trust 
at  all,  because  no  economy  w^ould  result.  These  com- 
binations occur  in  certain  kinds  of  long-established  in- 
dustries, but  the  factories  themselves,  even  when  con- 
solidated in  a  few  great  plants,  are  not  necessarily 
located  in  large  cities.  High  taxes  and  remoteness 
from  raw  materials  operate  against  that  movement. 
There  is  no  ground  for  supposing  that  trusts  are  prov- 
ing or  will  prove  inimical  to  the  small  towns  and  cities 
of  the  country.  On  the  contrary,  the  concentration 
tendency,  with  the  natural  balancing  checks  we  have 
mentioned,  is  directly  contributing  to  the  increase 
of  that  class  of  communities  whose  influence  is  a  power- 
ful stimulative  factor  in  the  social  progress  of  the 
nation. 


YIII. 
THE    STATE'S  EELATION  TO   CAPITAL* 

The  lack  of  general  recognition  on  the  part  of  capi- 
talists of  the  legitimacy  of  organized  labor  is  the  cause 
of  much  antagonism  between  labor  and  the  employing 
class.  Laborers  act  unwisely  sometimes,  and  their 
occasional  unwisdom  is  made  to  stand  for  their  entire 
conduct,  and  this  mistaken  attitude  towards  the  labor- 
ing class  as  a  distinct  element  in  the  community  is 
developing  a  severe  and  dangerously  acrimonious  class 
feeling  between  the  laborers  and  their  employers. 
This  extends  to  practically  every  class  in  the  com- 
munity, and  not  the  least  to  the  professional  classes, 
who  are  governed  largely  by  abstract  ideas  and  senti- 
ments, and  hence  a  social  atmosphere  antagonistic  to 
capital  is  created  by  the  mistaken  attitude  of  capitalists 
themselves  toward  the  labor  question. 

The  opposition  to  labor  organizations  by  the  employ- 
ing class  is  largely  due  to  the  failure  of  the  employing 
class  and  of  public  educators  correctly  to  understand  the 
new  conditions  created  by  the  revolutionary  industrial 
progress  that  has  taken  place  during  the  last  half  cen- 
tury. "What  is  true  of  capital  towards  labor  in  this 
respect  is  eminently  true  of  labor  and  the  community 
towards  capital.      The  conditions  which  have  so  altered 

*  Lecture  delivered  in  New  York  City,  October  18,  1898. 

99 


lOO  TRUSTS  AND  THE  PUBLIC 

the  character  of  industry  during  the  last  fifty  years, 
and  particularly  during  the  last  twenty-five  years,  have 
created  as  much  of  a  revolution  in  the  conditions  and 
character  of  capitalist  enterprise  as  it  has  in  laborers' 
conditions.  Forty  years  ago  a  capitalist  with  one 
hundred  thousand  dollars  was  nearly  at  the  top  of  the 
ladder  of  industrial  enterprise,  and  was  among  the 
leaders  of  the  best  methods  and  most  efficient  tj'^pe  of 
organization ;  but,  with  the  development  of  new  devices 
and  the  application  of  new  inventions,  machinery  has 
undero-one  such  an  enormous  chano;e  that  the  methods 
of  twenty  years  ago  are  effete  and  impotent  for  aught 
but  loss  to-day,  and  real  organization  of  productive 
industrial  methods  has  become  absolutely  necessary 
to  ordinary  success.  A  hundred  thousand  dollars  is 
scarcely  enough  to  run  a  small  mercantile  establish- 
ment now.  Nothing  short  of  millions  is  adequate  to 
efficient  productive  enterprise  in  most  of  the  great 
established  industries  of  the  country.  This  large  capi- 
tal and  organization  is  made  necessary  by  the  intricacy 
of  the  new  devices.  The  new  methods  which  work  so 
much  more  efficiently  and  cheaply  than  the  old  are 
available  only  when  production  can  be  maintained  on 
a  large  scale.  The  improved  features  involve  speciali- 
zation of  each  department,  interdependent  with  other 
departments,  so  that  unless  the  whole  can  be  conducted 
on  a  colossal  scale  the  advantages  of  the  new  devices 
cannot  be  obtained.  It  is  on  the  plan  that  to  carry  a 
small  number  of  people  a  railroad  would  be  dearer  and 
more  expensive  than  a  stage  coach ;  yet,  when  hun- 
dreds of  thousands  ride  every  day,  the  Manhattan 
Railroad  can  carry  us  ten  miles  for  five  cents,  and  tho 
surface  railroad  even  a  greater  distance;  whereas,  if 


THE   STATE  S    RELATION   TO    CAPITAL  lOI 

only  those  \y1io  had  incomes  of  .ten,  to  twenty  ttiousand 
a  year  should  ride  they  could  go  the  .same  distance 
cheaper  in  a  coach  and  four.  It  ii,  only  n*hsn  the  ser- 
vice can  be  utilized  by  the  millions'  that  th6  rOsuitG  are 
cheaper  by  the  new  than  by  the  old  methods. 

This  revolution  has  entered  almost  every  domain  of 
industr}^  It  is  very  natural  that  in  this  transition  and 
reorganization  the  small  concerns  and  individual  en- 
terprises conducted  on  the  old  and  highly  expensive 
methods  should  have  to  succumb.  They  are  superseded 
by  the  new  in  exactly  the  same  manner  that  the  hand 
loom  was  superseded  by  the  power  loom,  the  stage  coach 
by  the  railroad,  the  tallow  candle  by  gas,  and  now  by 
electricity.  This  is  inevitable,  but  it  always  follows, 
and  probably  always  will,  that  the  defeated  complain ; 
that  those  who  cannot  keep  up  with  the  rest  complain 
at  the  unfairness  of  the  others  for  going  so  fast.  There 
is  nothing  unnatural  in  this ;  indeed,  it  is  in  the  nature 
of  things.  The  consequence  is  that  in  the  last  quarter 
of  a  century  this  superseding  of  one  type  by  another 
and  supplanting  of  one  method  of  production  by  an- 
other has  produced  a  great  deal  of  this  resentment  in 
the  community.  The  feeling  of  hardship  among  those 
who  are  thus  being  displaced  is  not  that  the  successful 
men  are  capitalists,  because  it  is  a  case  of  capitalist 
superseding  capitalist.  It  is  just  the  same  among 
laborers.  The  hand-loom  weavers  smashed  the  ma- 
chines and  mobbed  their  fellow  laborers  who  used  the 
power  looms ; — not  because  they  were  capitalists,  or 
of  another  class,  for  they  were  all  weavers,  but  one 
was  using  new  methods  which  seemed  to  be  endanger- 
ing the  possibility  of  survival  of  the  old. 

This  tendency  of  concentration  and  integration  of 


102  TRUSTS  AND  THE  PUBLIC 

capital  to  bear  hard  on  the  smaller  concerns  is  not  be- 
cause, they  are- v-E,s2atia]ly  different  but  because  the 
new  capitalist  is  superseding  the  old  capitalist.  In 
each  csLsei'lie.r.e  is  a.tt^ridency  to  cry  out :  '^  Unfairness," 
and  sometimes  there  is  unfairness.  The  wail  of  com- 
plaint from  this  class  of  defeated  competitors  has  taken 
form  in  an  appeal  to  the  public  for  raising  the  hand  of 
the  state  against  the  growth  of  capitalist  aggregations. 
The  cry  of  monopoly,  which  is  always  a  note  of  alarm, 
is  vigorously  utilized,  and  the  public  is  asked  to  use  the 
political  power  of  the  state  to  suppress  this  ever  increas- 
ing capitalist  tendency.  "With  the  feeling  that  exists 
towards  capitalists  and  the  employing  class,  particu- 
larly among  the  laborers,  a  ready  ear  is  offered  to 
every  such  complaint. 

The  history  of  the  last  ten  years  shows  that  the 
legislation  in  almost  every  state  in  the  Union  has  a 
very  strong  anti-capital  flavor.  It  is  almost  a  com- 
monplace that  a  person  to  run  for  public  office  must 
be  against  trusts,  or  must  in  some  w^ay  or  another  ex- 
press his  willingness  to  enact  legislation  to  repress  the 
action  of  large  corporations.  Only  last  evening  Tam- 
many Hall  held  its  great  send-off  meeting  in  the  guber- 
natorial campaign  of  this  state,  and  it  brought  upon 
the  platform,  for  the  purpose  of  oratorical  and  political 
effect,  ex-Governor  Campbell,  of  Ohio.  Mr.  Campbell 
proclaimed,  loudly  and  with  seeming  seriousness,  that 
the  republican  party  was  the  party  of  trusts,  the 
party  of  large  corporations,  and  appealed  to  the  voters 
to  sustain  the  democratic  nominees  because  they  were 
opposed  to  corporate  enterprises.  An}?^  one  who  knows 
Mr.  Campbell  knows  that  this  was  political  gush,  mere 
demagogy — a  specimen  of  the  worst  kind  of  political 


THE   state's   relation   TO    CAPITAL  IO3 

humbug.  Mr.  Campbell  is  one  of  the  conspicuous  in- 
stances of  a  man  ^Yho  makes  his  living  largely  by  organ- 
izing new  corporations.  He  gets  big  bonuses  and 
large  fees  and  what  are  called  "  ground-floor  interests  " 
in  large  corporations  for  the  service  he  renders  in  or- 
ganizing these  institutions.  When,  therefore,  be  ap- 
peals to  the  voters  of  New  Tork  city  and  state  to  sup- 
port a  certain  party  because  it  is  the  enemy  of  these 
organizations,  he  is  a  mere  public  humbug.  He  does 
not  believe  what  he  says,  but  he  talks  to  stimulate 
public  prejudice  on  the  subject,  merely  for  the  purpose 
of  catching  votes  for  the  immediately  ensuing  election. 
This  is  dangerous  business,  but  it  is  becoming  more 
and  more  general.  The  people  who  indulge  in  this 
sort  of  talk  act  largely  upon  the  belief  that  all  that  is 
necessary  is  to  humbug  the  people  during  the  cam- 
paign, and  then  ignore  them  after  the  election  is  over. 
They  hope  to  avoid  carrying  out  their  promises  by  the 
practise  of  the  doctrine  that  platforms  are  made  to 
get  in  on,  not  to  stand  on.  But  this  dishonesty,  which 
much  of  it  is,  takes  real  hold.  Though  Mi\  Campbell 
does  not  believe  the  stuff  that  he  talked,  many  of  his  au- 
dience did.  The  people  are  more  honest  than  the  dema- 
gogues, and  take  them  at  their  word.  They  believe  in 
this  anti-capitalist  idea,  because  it  has  become  a  part 
of  this  kind  of  irresponsible  public  propaganda.  The 
consequence  is  that  when  such  a  man  as  Mr,  Campbell 
is  elected  governor  he  cannot  altogether  withstand  the 
demands  of  the  legislators  whom  his  audiences  have 
elected,  and,  though  he  may  not  believe  in  it,  he  is  forced 
to  acquiesce  in  repressive  legislation  against  capital 
and  thus  handicap  the  industrial  development  of  the 
country.      Not  to  do  this  creates  a  furious  agitation. 


104  TRUSTS  AND   THE   PUBLIC 

The  press,  a  certain  portion  of  which  is  as  demagog- 
ical as  are  the  Crokers  and  Campbells,  appeals  to  the 
laborers  and  to  every  victim  of  social  misfortune  on 
the  same  line,  until  the  atmosphere  becomes  sur- 
charged with  a  sort  of  quasi-socialism. 

This  leads  to  a  perversion  of  the  action  of  the  state 
towards  capital,  which  some  day  may  be  found  to 
have  so  completely  harassed  the  action  of  capital  that 
our  industrial  progress  will  be  seriously  retarded  and 
perhaps  even  brought  to  a  halt.  A  conspicuous  in- 
stance of  the  way  in  which  this  perverted  public  opinion 
is  created  is  the  case  of  the  Standard  Oil  Company. 
That  is  the  largest  and  perhaps  the  most  successful 
trust  in  the  country.  It  has  been  eminently  success- 
ful in  improving  the  quality  and  cheapening  the  cost 
of  the  commodity  it  produces.  In  doing  this,  as  is 
generally  the  case,  it  has  been  exceptionally  prosper- 
ous, as  it  should  be.  That  form  of  enterprise  which 
does  things  best  and  does  them  cheapest  ought  to  be 
most  successful,  else  improvements  would  not  go  on  ; 
and  that  which  does  things  the  poorest  and  charges 
the  most  for  the  same  product  ought  not  to  succeed, 
since  to  do  so  would  practically  be  to  put  a  premium 
on  incapacity  and  put  improvement  to  a  disadvantage. 

The  Standard  Oil  Company  has  been  the  object  of 
more  abuse  and  legislative  attack,  because  of  its  con- 
spicuous success,  than  any  other  corporation.  Legis- 
lation has  been  introduced  in  the  United  States  con- 
gress to  check  what  is  called  "  trust  organization." 
Even  Senator  Sherman  was  caught  by  the  clamor  and 
became  the  instrument  of  this  sentiment,  and  intro- 
duced what  is  known  as  the  "  Sherman  Anti-trust 
Law."     Several  states  have  enacted  lefi-islation  for  the 


THE   state's   relation   TO   CAPITAL  105 

object  of  crippling  or  forcing  the  Standard  Oil  organ- 
ization into  dissolution,  for  no  other  reason  than  that 
the  clamor  against  it  has  entered  into  the  domain  of 
politics  and  affected  the  political  opinion  of  the  com- 
munity. 

Last  week  a  public  hearing  was  held  at  the  New 
Amsterdam  Hotel  in  New  York  City,  in  the  case  of  the 
State  of  Ohio  against  the  Standard  Oil  Company.  As 
a  result  of  the  sentiment  to  which  I  have  referred,  Ohio 
passed  a  law  demanding  that  the  Standard  Oil  Com- 
pany of  Ohio  sever  its  connection  with  the  Standard 
Oil  trust,  and,  as  the  process  of  dissolution  has  not  been 
complete,  the  anti-capital  agitators  operating  in  politics 
in  Ohio  sent  a  special  delegation  representing  the  Su- 
preme Court  of  Ohio  to  conduct  an  investigation  into 
the  subject  in  this  city.  I  attended  one  of  these  public 
hearings  and  met  a  man  by  the  name  of  George  Rice, 
from  Marietta;  in  the  company  of  the  counsel  for  the 
State  of  Ohio.  Upon  my  asking  for  the  room  where 
the  hearing  was  to  be  conducted,  the  counsel  for 
Ohio  asked  if  I  represented  any  paper.  I  said  no, 
I  represented  Gunto7i's  Magazine.  "  Oh  yes,"  said 
Mr.  Rice,  "  that  magazine  has  been  saying  hard  things 
about  me."  And  then,  as  I  suppose  is  typical  of  the 
character  of  the  man,  he  broke  out  into  a  line  of  pro- 
fane abuse  which  cannot  be  repeated  here.  I  told  him 
that  I  had  said  in  the  magazine  that  I  believed  him  to 
be  a  bold  blackmailer  ;  I  still  believed  it,  and  had  come 
specially  to  hear  what  he  could  say  on  the  stand.  To 
my  surprise,  this  man  of  more  than  six  feet  suddenly  be- 
came calm  and  docile  and  proceeded  to  assure  me  that 
he  was  in  the  habit  of  telling  the  truth  !  During  the 
conversation  I  reminded  him  of  the  fact  that  he  had 


I06  TRUSTS  AND   THE   PUBLIC 

for  years  been  making  a  business  of  pursuing  the  Stand- 
ard Oil  Company  to  compel  it  to  give  him  half  a  mil- 
lion dollars  for  property  that  nobody  would  give  him 
twenty-five  thousand  for,  and  that  because  they  would 
not  buy  at  his  absurd  price  he  had  been  pursuing  them 
in  all  legal  and  political  wa3^s  for  fifteen  or  twenty 
years.  He  promised  to  call  at  my  office  with  the  evi- 
dence which  should  convince  me  of  his  innocence,  but 
he  has  not  done  so. 

A  few  days  after,  in  the  line  of  his  usual  methods, 
he  got  himself  interviewed  by  the  Kew  York  World, 
which  published  his  statement  with  a  half-page  picture 
in  last  Sunday's  edition,  printing  part  of  his  interview 
in  full  faced  black  type,  and  embellishing  the  story 
with  adjectives  and  emphasis,  presenting  him  to  the 
public  as  a  martyr  of  this  cruel  system  of  large  or- 
ganizations, and  particularly  of  the  Standard  Oil  Com- 
pany. 

Now,  the  public  has  no  benefit  to  derive  from  cor- 
porations unfairly  getting  the  upper  hand  of  competi- 
tors by  uneconomic  methods,  but,  on  the  other  hand,  it 
has  no  interest  in  coddling  and  encouraging  blackmailers 
to  beset  successful  business  men  and,  in  case  of  failure, 
to  threaten  them  with  adverse  legislation  or  with  ad- 
verse judicial  decisions.  This  Rice  case  is  perhaps  one 
of  the  most  conspicuous  of  its  kind  in  the  country,  and 
has  been  made  the  most  of,  and  since  it  is  now  re- 
vamped by  other  "yellow"  journals  as  well  as  the" 
World,  I  think  it  is  worth  while  here  to  say  a  little 
specifically  on  its  merits.  I  do  not  wish  to  imply  that 
there  are  many  George  Eices,  but  inasmuch  as  this  is 
made  a  basis  of  almost  national  appeal  to  the  public  to 
legislate  against  corporations  and  against  capital,  on 


THE   STATE  S   RELATION   TO   CAPITAL  10/ 

the  ground  of  this  man's  innocent  "martyrdom,"  it 
may  be  well  to  puncture  a  little  of  the  fraud  and  hum- 
bug connected  with  his  particular  case. 

I  will  take  only  a  few  of  his  statements  in  this  inter- 
view. Of  course,  his  general  assertion  is  that  the 
railroads  are  all  in  league  with  the  Standard  Oil  Com- 
pany to  crush  such  as  he.  It  is  a  little  peculiar,  any- 
how, that  the  whole  organized  railroad  capital  in  the 
community  should  go  into  a  conspiracy  against  such 
p^n  innocent  and  harmless  creature  as  Mr.  Rice  rep- 
resents himself  to  be. 

His  first  specific  indictment  is  that  the  railroads 
carry  oil  for  the  Standard  Oil  Company  cheaper  than 
they  will  for  him.  This  is  done,  he  says,  by  the  rail- 
roads refusing  to  furnish  tank  cars  and  compelling 
jobbers  to  ship  in  barrels  or  box  cars,  while  the 
Standard  Oil  Company  has  built  tank  cars  for  itself, 
which  the  railroads  haul  for  nothing.  That  is  to  say, 
when  the  independent  shippers  send  oil  to  the  Pacific 
seaboard  they  are  charged  $105,  he  says,  to  return  the 
empty  cjdinder  tank  car  from  the  Pacific  to  the  Mis- 
souri River.  These  tank  cars  of  the  Standard  Oil 
Company,  he  says,  are  returned  for  nothing,  thus  giv- 
ing the  trust  an  advantage  of  $100  a  car  over  such  as 
he.  This  sounds  plausible,  and  it  would  be  a  hardship 
if  it  were  true.  But  the  facts  in  the  case  are  that 
there  is  only  one  railroad  in  the  country  that  will  build 
tank  cars,  because  their  business  will  not  warrant  the 
investment.  That  road  is  the  Pennsylvania.  The 
Pennsylvania  Railroad  has  a  terminus  in  the  oil  fields 
and  at  the  seaboards,  and  therefore  has  more  through 
traffic  of  that  kind  than  any  other  road,  and  can  afford 
to  invest  in  tank  cars.     The  Pennsylvania  Railroad 


Io8  TRUSTS  AND   THE   PUBLIC 

supplies  these  cars  to  every  independent  producer  on 
exactly  the  same  terms  that  it  furnishes  them  to  the 
Standard  Oil  Company,  and  Mr.  Eice  does  not  venture 
to  state  to  the  contrary.  But  Mr.  Eice  refused  to  take 
advantage  of  this,  and  never  built  an}^  tank  cars  him- 
self. He  continued  the  old  crude  method  of  shipping 
in  barrels,  and  was  therefore  naturally  at  a  disadvan- 
tage with  those  who  shipped  in  tank  cars,  just  the  same 
as  the  manufacturer  who  insists  upon  using  old  effete 
machinery  will  be  at  a  disadvantage  with  the  one  who 
uses  the  new,  most  modern  inventions.  The  Standard 
Oil  Company  has  done  another  thing.  It  has  had 
many  of  its  own  tank  cars  so  constructed  that  they  can 
be  used  to  transport  freight  on  their  return,  thus  being 
able  to  earn  something  both  wa}'s.  "When  the  rail- 
roads can  use  the  tank  cars  to  bring  return  freight, 
the  Standard  Oil  Company  is  not  charged  for  the  haul- 
ing. "Why  should  it  be  ?  But  when  they  are  brought 
back  empty  it  has  to  pay  exactly  the  same  as  anybody 
else ;  so  that  Mr.  Eice's  statement  on  that  point  is 
simply  false.  It  is  simply  a  sour-minded  misrepre- 
sentation of  the  facts  in  the  case.  The  next  point  he 
makes  is  that  the  railroads  make  vile  discriminations 
in  favor  of  the  Standard  Oil  Company  and  permit  it  to 
ship  oil  in  small  quantities  at  the  rate  that  is  charged 
for  full  cars,  which  privilege  it  does  not  extend  to 
other  shippers.     On  this  point  Mr.  Eice  says  : 

"  Yet  another  thing  helped  to  ruin  me.  The  rail- 
roads allowed  the  trust  to  deliver  its  oil  in  less  than 
carload  quantities  at  the  same  rates  as  for  full  car- 
loads. They  allowed  the  trust  to  stop  its  cars,  whether 
carrying  oil  in  bulk  or  barrels,  at  different  stations 
and  take  it  off  in  small  quantities  without  paying  the 


THE   state's   relation   TO   CAPITAL  IO9 

higher  rates  which  independent  competitors  were 
ahvaj'^s  charged  for  small  quantities  thus  delivered. 
Of  course,  against  such  discriminations  as  these  the 
independent  competitor  of  moderate  capital  could  not 
contend.  He  was  driven  to  the  wall  every  time,  as  I 
was." 

Here  is  another  instance  that,  if  true,  would  indeed 
be  grossly  unfair.  But  the  facts  in  this  case,  as  Mr. 
Rice  well  knows,  do  not  sustain  his  statement.  He 
has  been  before  the  Inter-State  Commerce  Commission 
with  this  complaint ;  it  was  thoroughly  investigated 
and  proven  not  to  be  true  in  a  single  instance.  The 
decision  on  this  point  is  reported  in  the  case  of  E-ice 
versus  Railroad  Companies,  Fifth  Inter-State  Com- 
merce Commission  Report,  page  6G0.  Here  is  what 
the  Commission  says  on  the  point : 

"  The  third  ground  of  complaint  appears  to  be 
wholly  unfounded.  There  is  no  evidence  that '  favored  * 
shippers  have  secured  carload  rates  on  less  than  car- 
load shipments,  by  being  permitted  to  remove  portions 
of  the  contents  of  cars  at  intermediate  stations  be- 
tu'^een  the  points  of  shipment  and  of  destination.  The 
verified  answers  of  the  defendants  explicitly  deny  that 
an}"  such  discriminations  have  occurred  and  that  denial 
is  fortified  by  the  positive  testimony  of  their  witnesses. 
The  petitioner  did  not  appear  at  the  hearing,  though 
duly  notified  thereof,  and  has  offered  no  proof  in  sup- 
port of  the  information  and  belief  upon  which  his 
allegations  were  made.  As  to  these  charges  the  com- 
plaint must  be  dismissed." 

Thus  you  see  this  man  Rice  labored  to  get  this  com- 
plaint before  the  Inter-State  Commerce  Commission, 
and  then,  after  being  duly  notified,  had  not  the  cour- 


no  TRUSTS  AND   THE  PUBLIC 

age  to  appear,  and  the  thing  was  thoroughly  investi- 
gated and  his  allegations  proved  to  be  untrue  in  every 
particular.  Yet  in  the  face  of  this  decision  he  expresses 
himself  before  the  public  in  this  specially  imposing 
interview,  and  asserts  that  this  thing  is  still  true.  He 
repeats  what  he  knows,  and  what  the  Inter-State  Com- 
merce Commission  has  declared,  to  be  absolutely  and 
unqualifiedl}"  unfounded. 

I  ouffht  to  have  said  that  his  statement  that  the 
Standard  Oil  Company  gets  its  empty  tank  cars  re- 
turned free  has  also  been  the  subject  of  investigation 
by  the  Inter-State  Commerce  Commission,  and  in  that 
case  again  the  charge  was  found  to  be  wholly  unsup- 
ported. Rice  could  give  no  evidence  of  the  truth  of 
his  affirmation,  yet  he  repeats  it  in  this  demagogical 
way  as  if  it  were  a  verified  fact,  when  he  knows  it  is 
a  literally  false  statement. 

A.nother  statement  that  Mr.  Eice  made  in  this  inter- 
view was  regarding  the  so-called  "  South  Improvement 
Company,"  and  that  there  may  be  no  mistake  I  will 
read  what  he  says  : — 

"  To  understand  the  growth  of  this  crushing  mo- 
nopoly  you  need  to  go  back  to  the  foundation  of  it. 
In  January,  1872,  the  trunk  lines  of  railroads  made 
a  contract  with  a  corporation  called  '  The  South  Im- 
provement Company,'  which  was  only  another  name 
for  the  Standard  Oil  Company,  under  which  the  Stand- 
ard Oil  Company  was  allowed  the  most  outrageous 
discriminating  freight  rates.  It  seems  incredible  that 
these  contracts  should  have  been  made.  They  not  only 
gave  the  Standard  Oil  Company  heavy  rebates  on  their 
own  shipments  of  oil,  but  gave  them  rebates  on  the 
shipments  of  their  competitors.     At  that  time  the 


THE   state's   relation  TO   CAPITAL  III 

Standard  Oil  Company  only  had  10  per  cent,  of  the 
petroleum  industry  of  the  country,  while  their  com- 
petitors had  90  per  cent.  The  rebates  allowed  to  the 
Standard  people  were  from  40  cents  to  $1.06  per  barrel 
on  crude  petroleum,  and  from  50  cents  to  $1,32  per 
barrel  on  refined  petroleum.  Thus  the  Standard  Oil 
Company  received  nine  times  as  much  for  rebates  on  the 
shipments  of  its  competitors  as  it  did  on  its  own." 

This  is  a  fair  sample  of  what  might  properly  be 
characterized  as  the  villainy  of  this  man's  method  of 
procedure.  You  remember  that  a  few  years  ago  (1894) 
a  man  named  Lloyd  published  a  book  called  "  Wealth 
against  Commonwealth,"  and  he  made  a  statement 
similar  to  this.  I  investigated  the  matter  at  the  time 
and  found  out  (and  have  since  discovered  that  Mr. 
Lloyd  knew  it)  that  this  "  South  Improvement  Com- 
pany "  never  had  any  existence  at  all ;  that  it  was  a 
pure  myth.  All  there  was  of  it  was  that  a  few  men 
met  together  and  got  up  a  scheme  which  was  so  bad 
that  they  never  dared  for  one  moment  to  try  to  put 
it  into  practise.  This  man  Rice  speaks  of  it,  Mr. 
Lloyd  spoke  of  it,  and  hundreds  of  other  people  who 
hear  these  statements  continue  to  speak  of  it  as  though 
it  were  a  honafide  company  which  actuall}^  did  business 
with  the  railroads  and  got  these  fabulous  rebates. 
Now,  Mr.  Rice  knows,  or  he  ought  to  know  before 
he  speaks  as  a  martyr  authority  on  the  subject,  that 
this  so-called  "  South  Improvement  Company  "  never 
did  a  dollar's  worth  of  business  in  the  world,  and 
therefore  not  one  penny  of  these  rebates  was  ever  paid, 
because  the  whole  thing  was  a  still-born  affair ;  yet  he 
repeats  that  lie  as  if  it  were  veritable  truth  to-day. 

Undoubtedly,  in  the  seventies,  the  railroads  did  give 


112  TRUSTS  AND   THE  PUBLIC 

rebates  to  tlie  Standard  Oil  Company,  but  in  no  such 
vra^y  as  the  mythical  contract  of  the  South  Improve- 
ment Company  indicates.  In  talking  about  rebates 
it  should  be  remembered  that  at  that  time  it  was  the 
habit  of  all  railroads  to  give  rebates  to  large  shippers. 
It  was  not  peculiar  to  the  Standard  Oil  Company,  nor 
to  any  other  large  shipper.  They  gave  rebates  in  the 
same  way  and  for  the  same  reason  that  purchasers  of 
large  quantities  can  always  get  a  better  price  than  the 
purchasers  of  small  quantities.  The  Standard  Oil 
Company  was  a  very  large  shipper,  and  the  railroads 
wanted  its  trade,  and  they  bid,  just  as  paper  manu- 
facturers or  producers  in  any  line  will  bid,  for  the  trade 
of  a  very  large  customer  and  one  whose  payment  is 
prompt  and  sure. 

It  is  on  the  same  principle  as  the  long  and  short- 
haul  matter,  in  the  case  of  railroads.  Anybody  who 
knows  anything  of  railroading  knows  that  if  the  same 
rate  were  paid  per  mile  for  all  freight  on  long  dis- 
tances, on  many  of  the  roads  a  large  portion  of  their 
territory  would  be  absolutely  excluded  from  reaching 
the  market.  It  is  not  only  customary,  but  it  is  de- 
finitely economic  and  good  business,  for  a  railroad  to 
take  freight  under  some  circumstances  at  less  than  it 
would  actually  cost  if  the  investment  and  rolling  stock 
were  all  considered.  "When  a  road  is  equipped,  all  its 
fixed  costs  are  substantially  the  same  to  do  a  small 
business  as  to  do  a  large  one.  Indeed,  traffic  obtained 
in  this  way  frequently  enables  a  road  to  lower  freight 
on  its  whole  business  ;  yet  those  who  do  not  get  the 
lower,  or  long-haul,  rates  think  they  are  injured  and 
cry  out  against  it.  As  a  matter  of  fact  they  are 
benefited,  because  without  the  long-haul  business  the 


THE   state's   relation   TO   CAPITAL  II 3 

rates  on  the  short-haul  would  have  to  be  higher  in 
order  to  make  the  road  pay  at  all.  That  is  the  secret 
of  all  rebates  for  large  business,  or  great  discounts  for 
large  orders  and  cash  payments.  There  is  nothing  ex- 
ceptional in  the  rebate  idea  for  large  business.  It  is  as 
old  and  as  permanent  as  business  itself. 

Another  statement  that  this  man  makes  is  in  re- 
gard to  a  railroad  scheme  for  carrying  oil  from  Macks- 
burg  to  Marietta.  On  this  point  he  says — I  again 
use  his  own  words  : — 

"  To  show  )'ou  how  the  rebate  system  worked  in  my 
own  case,  let  me  say  that  in  18S5  I  was  charged  35 
cents  a  barrel  for  carrying  oil  from  Macksburg  to 
Marietta,  a  distance  of  twenty-five  miles,  while  the 
Standard  Oil  Company  paid  only  10  cents  a  barrel  for 
the  same  distance.  More  than  this,  out  of  the  35  cents 
a  barrel  that  I  paid  the  trust  actually  received  25  cents. 
In  other  "words,  the  trust  received  about  two-thirds  of 
all  the  money  I  paid  for  freight." 

This,  you  observe,  he  presents  as  one  of  the  things  that 
helped  to  ruin  him.  The  facts  in  this  case  have  been 
brought  out  fully  in  the  public  hearings  and  in  the 
courts,  but  Mr.  Rice  knows  that  the  average  reader  of 
newspapers  has  not  read  these  investigations  and  court 
reports,  and  therefore  he  feels  perfectly  safe  to  go  on 
making  a  repeated  announcement  of  this  alleged  piece 
of  infam}'.  The  facts  in  this  case  are  these :  At  the 
time  to  "svhicli  he  refers  the  railroad  company  men- 
tioned was,  I  believe,  in  the  hands  of  a  receiver.  Some 
local  agent  of  the  Standard  Oil  Company  made  a  con- 
tract with  the  railroad  Avith  some  such  features  as  Mr. 
Kice  here  describes,  though  not  exactly,  but  at  any  rate 

the  contract  was  an  outrageous  one.    The  agreement 
8 


114  TRUSTS  AND   THE   PUBLIC 

was  enforced  immediately,  before  it  was  submitted  to 
the  trust  at  all.  As  soon  as  it  reached  headquarters  it 
was  seen  to  be  obviously  not  merely  unfair  but  illegal, 
and  was  revoked  and  the  transaction  stopped;  and 
what  is  more,  every  dollar  of  over  charge  that  had  heen 
collected  loas  returned.  Mr.  Rice,  by  reason  of  that 
transaction,  had  paid  in  overcharge  (all  this  was  brought- 
out  in  the  public  hearings)  something  over  two  hundred 
dollars,  and  it  was  all  returned  to  him ;  so  that,  bad  as 
the  contract  was,  Mr.  Rice  never  lost  a  penny  by  it. 
For  him  to  present  that  as  one  of  the  ways  by  which 
he  was  ruined  only  reveals  the  character  of  the  man. 

I  refer  to  this  particular  case,  as  I  said,  because  it  is 
just  now  being  made  a  conspicuous  illustration  of  the 
heartless,  crushing  and  deadening  influence  of  great 
corporations,  particularly  the  Standard  Oil  Company, 
and  this  man  is  paraded  as  a  typical  victim.  But,  it 
may  be  asked,  what  motive  has  he  for  doing  all  this  ? 
This  is  a  very  proper  question.  The  motive  has 
been  thoroughly  revealed  in  the  various  attempts  Mr. 
Rice  has  made  in  trying  to  get  decisions  and  legislation 
against  the  Standard  Oil  Company.  The  secret  of  it 
is  that  he  wants  to  blackmail  the  Standard  Oil  Com- 
pany out  of  a  half  a  million  of  dollars.  The  simple 
facts  on  that  aspect  of  the  case,  which  1  repeated  to 
Mr.  Rice's  face  and  which  he  has  not  kept  his  promise 
to  furnish  the  evidence  against,  are  about  like  this : 

He  was  a  small  refiner  in  Marietta.  He  did  not 
keep  up  with  the  current  of  improvements  and  made 
up  his  mind  that  he  would  sell  his  plant  instead  of 
adopting  the  new  methods,  such  as  building  tank  cars, 
and  other  improvements.  He  decided  that  he  would 
try  to  force  the  Standard  Oil  Company  to  buy  his  prop- 


THE   state's   relation   TO   CAPITAL  II5 

erty  at  a  fabulous  price.  The  property  was  worth  at 
one  time  perhaps  about  twenty-iive  thousand  dollars, 
but  with  the  neglect  and  lack  of  up-to-date  appliances 
is  worth  practically  nothing  to-day.  He  went  to  the 
Standard  Oil  Company  (and  this  has  been  in  evidence 
in  the  courts)  and  wanted  to  sell  out  for  a  half  a  million 
of  dollars.  They  declined  to  buy.  One  would  think 
that  if  a  person  had  a  piece  of  property  to  sell  and  he 
tried  to  sell  it  to  a  party  and  they  declined  to  buy,  he 
would  go  and  search  other  purchasers,  or  use  the  prop- 
erty himself.  But  no ;  this  man  made  up  his  mind  that 
he  would  make  them  buy,  and  if  they  would  not  buy 
he  would  make  it  cost  them  a  good  deal  more  than  half 
a  million,  and  it  is  for  not  buying  it  at  this  price  that 
he  has  pursued  them  and  devoted  as  much  energy  to 
trying  to  compel,  by  fair  means  or  foul,  the  Standard 
Oil  Company  to  give  him  half  a  million  dollars  for  his 
plant,  as  would,  by  application  to  his  industry,  have 
probably  earned  him  twice  that  amount.  It  often  hap- 
pens that  lazy  people  will  put  forth  more  energy  not  to 
do  a  thing  than  is  required  to  do  it.  This  appears  to 
be  Mr.  Rice's  case.  He  has  pursued  the  Standard  Com- 
pany during  all  these  years,  and  accompanied  his  prop- 
ositions with  threats  that  if  they  did  not  come  to  terms 
he  would  instigate  hostile  legislation,  efe.  I  exposed 
this  matter  two  or  three  years  ago  in  an  interview 
given  the  Boston  Herald,  in  reply  to  an  interview  on 
the  subject  by  Mr.  Lloyd,  to  whom  I  have  already  re- 
ferred. Since  that  time  this  man  Rice  has  repeated 
his  propositions  to  the  Standard  Oil  Company,  directly 
and  indirectly,  several  times.  He  is  getting  very  cun- 
ning, to  be  sure,  and  refuses  to  put  much  in  writing. 
Sometimes  he  has  sent  irresponsible  brokers,  with  whom, 


Il6  TRUSTS  AND   THE   PUBLIC 

doubtless,  he  promised  to  divide  the  spoils.  Sometimes 
he  has  succeeded  in  getting  a  reputable  lawyer  to  ap- 
proach the  trust  with  his  proposition.  Recently  he 
did  this,  and  the  company  refused  to  talk  unless  the 
lawyer  could  furnish  written  authority  for  his  action, 
and  he  did  so,  and,  when  asked  what  Mr.  Rice  had  to 
sell  or  deliver  for  the  five  hundred  thousand  dollars  he 
was  demanding  as  a  stand-up  price,  he  gave  a  schedule 
of  property  worth  less  than  ten  thousand  dollars,  but 
frankly  said  that  the  greater  part  of  the  value  he  had 
to  deliver  was  the  withdrawal  of  litigation,  the  stop- 
ping of  further  annoyance,  and  the  heading  off  of  an 
adverse  decision  by  the  Inter-State  Commerce  Commis- 
sion. Rice  actually  attempted  to  trade  by  this  black- 
mailing method  upon  his  power  to  influence  legislation 
and  the  decisions  of  the  Inter-State  Commerce  Com- 
mission. 

1  did  not  intend  to  dwell  so  long  upon  this  case,  but 
it  is  being  made  so  much  of  and  is  so  scandalous  that 
I  could  not  refrain  from  speaking  of  it.  It  is  not  an 
average  case,  I  am  glad  to  say,  but  it  is  at  least  a-  case 
■which  shows  the  lengths  to  which  a  perverted  senti- 
ment against  capital  may  go.  The  encouragement  that 
this  man  has  received  b}?"  demagogical  newspapers  and 
public  clamor  is  the  thing  which  alone  has  sustained 
him   in  his  highwayman  methods. 

It  is  time  that  public  sentiment  w^as  aroused  on  this 
subject.  We  are  in  danger  of  suffering  quite  as  much 
from  this  false  and  pernicious  attitude,  and  the  conse- 
quent legislation,  as  we  are  from  the  rash  conduct  of 
illy-informed  and  demagogicallv-led  labor  mobs.  Labor 
has  its  legitimate  rights,  and  the  state  has  a  true  func- 
tion and  duty  towards  laborers,  as  I  have  said,  which 


THE   STATES   RELATION   TO   CAPITAL  11/ 

is  educational  and  protective.  The  protection  should 
ahva3^s  be  in  the  rigid  guarding  of  every  right  laborers 
have  acquired,  and  in  the  maximum  assistance  to  every 
new  opportunity,  social,  industrial  and  political,  that 
the  laborers  can,  either  individually  or  in  their  organ- 
ized capacity,  take  advantage  of.  In  reference  to  capi- 
tal the  same  is  true.  There  are  capitalists  who  will 
wantonly  oppress  labor  and  who  will  wantonly,  if  needs 
be,  corrupt  the  state.  But  this  is  not  the  general  char- 
acter of  American  business  men,  any  more  than  dema- 
gogy is  the  general  character  of  American  laborers. 
There  is  no  one  thing  that  is  more  dangerous  to  pub- 
lic welfare  than  this  unwholesome,  chiefly  unfounded, 
and  perverted  antagonism  to  the  legitimate  develop- 
ment of  capital  into  corporate  forms  and  large  enter- 
prises. The  state  should  permit  the  free  movement  of 
this  tendency,  for  it  is  through  this  progress  alone  that 
the  community,  of  which  laborers  constitute  a  large 
majority,  get  the  real  benefits  of  modern  civilization  ; 
— the  cheaper  wealth,  the  shorter  working  day,  the 
new  devices  for  domestic  and  social  improvement,  the 
great  public  expenditures,  improvements  in  domestic 
architecture,  and  so  on,  all  of  Avhich  are  the  outcome  of 
capitalistic  development.  Take  away  concentration  of 
capital,  so  that  millions  cannot  be  devoted  to  experimen- 
tation, as  now  ;  give  us  small  concerns  with  a  few 
hundred  thousand  dollars  capital,  and  we  are  at  once 
put  back  to  the  relatively  simple  life  and  plodding 
methods  of  fifty  years  ago.  Take  away  concentrated 
capital  and  we  take  the  very  life-blood  of  industrial, 
social  and  political  progress  out  of  the  community. 
The  improved  efficiency  and  organization  of  productive 
forces  are   essential  to   modern  progress.     What   we 


Il8  TRUSTS  AND   THE  PUBLIC 

want,  and  what  the  state  must  be  utilized  to  give  us,  is 
protection  and  freedom  for  the  productive  forces  of 
society,  because  it  is  only  by  this  superior  application 
of  capital  that  any  increased  contribution  to  the 
community's  aggregate  wealth  can  come,  and  it  is  on 
this  increased  contribution  to  the  aggregate  wealth  of 
the  community  that  the  only  hope  of  the  laborers  for 
betterment  of  their  condition  really  rests. 

At  the  same  time  let  us  see  to  it  that  labor  has 
the  encouragement  of  the  state  in  every  legitimate 
means  that  it  can  devise  to  take  an  increasing  portion 
of  the  products  of  this  capital  and  transfer  it  to  the 
wage-earners  and  the  public.  The  true  way  in  which 
this  can  be  done  (and  must  be  done  if  it  is  done  at  all) 
is  not  by  legislation  against  capital,  not  by  socialization 
of  industry,  not  by  public  control,  but  by  increasing 
the  social  and  political  influences  by  which  wages  shall 
be  increased,  hours  of  labor  reduced,  and  public  im- 
provements made.  It  is  only  by  these  means  that  the 
laborers  can  get  an  addition  to  their  income  or  a  con- 
tribution to  superior  social  conditions.  But  in  order 
that  the  condition  of  the  laborers  may  be  improved  in 
these  ways,  that  their  organized  efforts  may  be 
efficient  in  demanding  higher  wages,  better  social 
conditions,  greater  freedom  and  opportunity,  we  must 
at  the  same  time  protect  and  encourage  the  possibilities 
of  the  source  from  which  this  wealth  is  to  be  taken, 
viz.,  capitalistic  production.  Any  organized  effort  to 
use  the  state  against  the  free  development  and  ap- 
plication of  science  and  organization  to  industry  is  a 
movement  against  public  welfare,  against  the  laborer, 
against  progress  and  against  civilization. 


IX. 

THE  STATE'S  EELATION  TO  LABOK  * 

In  discussing  the  relation  of  the  state  to  labor,  it  is 
not  a  question  of  whether  the  state  can  do  this  or  that, 
but  whether  it  ought  to  do  this  or  that,  i^A  the  ought 
to  do  and  wisdom  of  doing  must  not  and  cannot  be 
determined  by  mere  feeling,  or  the  seeming  immediate 
necessity  or  local  emergency.  It  should  be  governed 
by  the  general  principle  of  what  in  the  light  of  eco- 
nomic science  and  experience  is  most  likely  in  the  long 
run  to  promote  the  welfare  of  the  laboring  class.  As 
I  have  frequently  remarked,  the  functions  of  the  state 
are  primarily  protective,  educational  and  judiciary  ; 
that  is,  to  protect  the  interests  and  rights  of  society, 
to  adjudicate  competing  claims  between  parties,  and 
to  promote  in  all  the  ways  feasible  the  educational 
influences  and  opportunities  among  the  people,  with 
the  view  of  developing  a  more  intelligent  standard  of 
citizenship  and  a  broader  social  character  in  the  com- 
munity. In  this  respect  the  duty  of  the  state,  it  will 
be  seen,  is  not  directly  to  do  for  the  people,  as,  for 
instance,  in  giving  employment  and  running  industries 
and  owning  property  or  conducting  in  any  way  profit- 
making  enterprises ;  but  rather  to  exercise  its  supreme 
authority  in  the  direction  of  guarding  and  increasing 

*  Lecture  delivered  in  New  York  City,  October  11th,  1898. 

119 


I20  TRUSTS  AND   THE   PUBLIC 

the  opportunities  for  self -improvement  in  every  domain 
of  life  among  the  citizens.  This,  in  a  simple  society, 
may  involve  very  little  state  action,  but  as  society 
grows  in  complexity  and  diversity  the  number  of 
ways  in  which  the  state  can  act  in  fulfilling  its  educa- 
tional functions  steadily  multiplies,  and  the  multiplica- 
tion of  these  activities  may  seem  at  first  sight  like 
making  the  state  more  paternal,  when  in  reality  it  is 
only  extending  the  action  of  the  state  to  new  protect- 
ive needs  or  educational  opportunities  which  the  new 
conditions  and  interests  have  created. 

This  is  conspicuously  the  case  in  reference  to  the 
labor  question.  "When  industry  was  conducted  by 
simple  methods,  and  the  majority  of  the  people  worked 
for  themselves  or  were  employed  in  simple  industries 
like  agriculture  and  hand  manufacture,  the  23roblems 
were  simple  and  the  functions  of  the  state  in  relation 
to  labor  were  very  meager.  They  consisted  chiefly  of 
providing  for  the  care  of  paupers,  insane,  and  otherwise 
helpless  members  of  the  community ;  in  the  normal 
conditions  of  employment  there  was  little  for  the 
state  to  do,  because  there  was  but  little  complexity 
and  few  new  interests  and  problems.  "With  the  growth 
of  modern  industry,  however,  since  the  completion 
of  the  factory  system,  this  has  radically  changed. 
In  no  sphere  of  society  has  the  expansion  and  multi- 
plication of  interests  and  problems  been  so  great  as 
among  the  wage  class.  This  is  very  natural.  The 
development  of  steam,  and  of  capitalistic  methods  of 
industry,  revolutionized  the  entire  type  of  industry, 
methods  of  working,  and  social  life  of  the  laboring  class. 
It  transformed  the  laborer  from  an  individual  producer 
to  a  fractional  economic   automaton.     It  made  the 


THE   state's   relation   TO   LABOR  121 

shoemaker  into  a  peg  driver,  a  sole  cutter,  or  any  one 
of  more  than  sixty  sub-divisions  of  shoeraaking.  It 
did  tiie  same  with  the  weaver  and  spinner  and  every 
mechanic  emploj^ed  in  complex  machine-using  manu- 
facture. 

This  is  not  to  be  lamented.  It  is  not  something 
which  should  be  got  rid  of,  or  against  which  society 
should  be  organized  and  public  sentiment  inflamed  and 
the  hand  of  the  state  adversely  raised  ;  but  it  is  a  fact 
to  be  recognized,  it  is  the  process  by  which  modern 
civilization  has  come.  It  is  the  process  by  which 
western  civilization  must  be  taken  to  the  East.  It  is 
the  process,  in  short,  by  which  barbarism  shall  be 
eliminated  and  an  ever  higher  and  higher  civilization 
ushered  in  and  established.  Consequently,  it  is  a  fact 
to  be  recognized  and  reckoned  with,  and  not  fought 
and  denounced. 

By  "  recognition  "  of  this  fact  in  its  full  significance 
I  mean  more  than  merely  to  know  that  it  is  here  ;  I 
mean,  recognize  it  as  being  here  to  stay,  and  being 
here  as  in  reality  the  only  means  of  promoting  a  higher 
state  of  civilization.  Consequently  this  should  not 
be  in  any  sense  made  the  basis  of  any  policy  of  subver- 
sion or  overthrow,  but  should  be  recognized  and 
studied  solely  with  the  view  of  adapting  society  to 
it.  To  resist  it  is  like  resisting  the  law  of  gravita- 
tion. 

This  means  that  we  must  recognize  as  a  thing  inevi- 
tably to  be  counted  with  that  the  laboring  class  as  a 
class  has  ceased  to  be  composed  of  what  we  like  to  call 
independent  individuals.  The  laborer  is  not  economi- 
cally an  individual.     He  has  not  the  freedom  to  make 


122  TRUSTS  AND   THE   PUBLIC 

individual  contracts.  He  cannot,  if  he  would,  go  to  an 
employer  and  stipulate  for  himself  alone  the  wages  he 
shall  have,  the  hours  of  labor  he  shall  work,  and  the 
specific  conditions  under  which  he  shall  work.  The 
capitalist  could  not,  if  he  w^ould,  grant  or  concede 
special  contracts  with  each  individual  laborer  on  these 
matters.  The  very  nature  of  employment  has  made  it 
impossible.  The  great  factory  methods  have  made  the 
organization  of  production  inevitable,  by  which  all 
laborers  in  a  given  industry  must  work  under  common 
conditions  as  to  hours  of  labor,  w^ages  and  sanitary 
conditions  of  various  kinds.  This  is  no  longer  at  the 
individual  option  of  either  the  employer  or  the  laborer. 
Then  it  is  useless,  it  is  futile,  it  is  false,  longer  to  talk 
of  the  laborer  as  having  the  right,  even  relatively,  to 
make  individual  contracts  regarding  all  these  primary 
conditions  of  earning  a  living. 

This  has  necessarily  reduced  the  laborers  to  an  in- 
dustrial group  or  class.  Bricklayers  are  a  group. 
They  must  act  in  common  or  not  at  all.  Carpenters, 
w^eavers,  shoemakers,  tailors,  are  groups ;  they  are 
parts  of  an  industrial  man,  not  complete  industrial  in- 
dividuals. They  never  can  be  that  without  returning 
to  the  simple  methods  of  hand  labor  and  relative  bar- 
barism. It  is  not  important  that  they  should  be  indus- 
trial individuals,  but  it  is  important  that  the  fact  that 
they  are  not  should  be  recognized,  and  therefore  that 
the  individualist  idea  be  not  urged  against  them  when 
they  are  naturally  acting  in  groups.  In  acting  in  groups 
and  organized  unions  they  do  a  great  many  things 
"which  are  indefensible,  as  do  all  groups.  In  that  sense 
they  are  not  exceptions.  All  social  organizations  make 
mistakes,  have  bad  leaders,  ignorant  representatives, 


THE   state's   relation  TO   LABOR  1 23 

demagogues, — in  short,  unscrupulous  and  inefficient 
members  who  sometimes  get  to  the  front.  This  is  true 
of  church  organizations,  social  organizations,  political 
organizations,  and  so  on.  Our  political  bossism,  against 
which  public  warfare  is  now  so  rife,  is  a  conspicuous 
instance  of  the  kind.  In  dealing  with  this  particular 
phase  of  the  labor  question,  which  is  a  pressing  one 
because  it  comes  up  most  frequently,  we  make  the  max- 
imum amount  of  mistakes.  The  reasoning  on  the  sub- 
ject by  populists,  legislators  and  most  economists  is 
painful  in  its  lack  of  recognition  of  the  fact  that  the 
defects  of  the  labor  movement  are  defects  of  a  natural 
movement.  The  tendency  all  the  time  is  to  insist  that 
the  movement  is  unnatural.  Here  the  economic  text- 
books are  as  much  to  blame  as  any  other  kind  of  con- 
tribution to  public  sentiment  on  the  subject.  It  is 
quite  common  for  economists  and  for  editors,  theorists 
and  intelligent  leaders  of  public  opinion  to  censure  the 
labor  movement  because  its  promoters  are  only  a  part 
of  the  whole  labor  body. 

In  a  work  on  The  Political  Economy  of  Natural 
Law,  the  author,  Henry  Wood,  takes  great  pains  to 
show  that  the  despotism  and  oppressive  features  of  the 
trade  union  movement  consist  in  the  fact  that  its  mem- 
bership never  includes  more  than  a  small  minority  of  the 
whole  wage  class  for  which  it  pretends  to  speak.  I  men- 
tion this  because  this  writer  states  what  has  almost  be- 
come hackneyed, — as  though  it  were  a  conclusive  answer 
to  the  claim  of  the  legitimacy  of  organized  labor.  Trade 
unions,  on  this  theory,  have  no  right  to  speak  for  the 
laboring  class  unless  their  membership  includes  at  least 
a  majority  of  the  class.  On  this  principle  there  is  not 
a  political  party,  nor  a  church,  nor  an  organization  of  any 


124  TRUSTS  AND   THE   PUBLIC 

kind  that  would  have  a  right  to  speak.  If  Tre  say 
that  trade  unions  do  not  represent  the  interests  and 
sentiments  of  their  class,  because  their  membership 
roll  does  not  contain  a  majority  of  the  members  of  the 
class,  we  might  say  that  the  churches  do  not  represent 
the  Christian  sentiment  of  the  community,  for  surely 
it  is  true  that  the  membership  roll  of  the  churches  does 
not  include  anywhere  near  a  majority  of  the  whole 
community.  We  might  say  that  the  republican  or 
democratic  party  does  not  represent  the  republicans  and 
democrats  in  any  community  because  the  membership 
roll  of  the  organization  does  not  contain  a  majority  of 
the  voters  of  that  political  faith  in  that  community. 
By  that  test  there  could  be  no  party,  for  in  no  district, 
certainly  in  no  crowded  district,  does  the  party  organ- 
ization include  a  majority  of  the  party  voters  in  that 
community.  This  argument  is  contrary  to  all  human 
experience  in  group  action. 

Representation  seldom  includes  a  majority  of  the 
whole,  never  the  whole.  The  truth  is  that  represen- 
tation in  voluntary  organizations  includes  the  active 
spirits  who  voice  the  sentiments  silently  acquiesced 
in  by  the  rest.  The  idea  that  the  organization  does 
not  represent  a  body  because  its  membership  rolls  do 
not  include  the  majority  of  those  interested  has  no 
experience  whatever  to  rest  upon.  It  is  a  sophistical 
quibble.  It  is  the  invention  of  the  sophist  in  special 
pleading  against  the  laborers,  and  is  applied  to  no 
other  form  of  social  or  economic  or  political  organiza- 
tion. It  is  wholly  unwarranted,  and  in  justice  to  the 
laborers  it  should  be  discarded.  In  no  other  form  of 
organization  that  I  know  of  do  we  exact  perfection  on 
the  penalty  of  disorganization.     We  do  not  think  of 


THE   state's   relation   TO   LABOR  12$ 

asking,  for  instance,  that  political  organizations  and 
political  parties  shall  be  renounced  and  abolished 
because  they  occasionally  run  into  corruption,  as  in 
the  case  of  Tammany,  and  develop  objectionable 
bosses  here  and  there,  in  the  form  of  leaders.  Not  at 
all.  Nobody  asks  that  the  Christian  Church  should 
be  abolished  because  now  and  then  a  vestryman  or  a 
minister  conducts  himself  in  a  manner  unbecoming  a 
Christian.  No.  In  all  other  spheres  the  idea  is  ac- 
cepted that  there  must  be  reforms,  that  the  methods 
must  be  improved,  that  the  membership  be  elevated, 
that  the  leadership  be  purified.  But  the  defects  in 
labor  organizations  are  all  cited  to  show  the  unnatural- 
ness  and  the  unfeasibility  of  the  organization  itself. 
In  short,  the  shortcomings  are  cited  to  show  that 
unions  jper  se  are  an  injury. 

It  must  be  admitted  that  there  is  a  tendency  to  out- 
grow this  narrow  view  of  the  subject ;  that  in  spite  of 
all  this  kind  of  reasoning  the  unions  stay,  working- 
men  organize,  and  go  on  as  if  nothing  had  been  said 
at  all.  The  very  fact  of  their  existence  and  increasing 
influence  is  forcing  itself  upon  public  recognition ;  but 
so  long  as  in  theory  we  hold  the  idea  that  these  organ- 
izations are  bad,  unnatural,  uneconomic,  and  contrary 
to  the  best  interests  of  society  and  the  best  interests 
of  the  laborers  themselves,  we  shall  continue  to  re- 
gard them  from  the  wrong  point  of  view, — from  the 
point  of  view  of  suppressing  rather  than  improving 
them.  So  long  as  we  do  that,  we  encourage  the  hos- 
tile attitude  of  the  employing  class  and  the  hostile 
attitude  of  the  representatives  of  society  towards  this 
great  movement,  and  hostility  always  tends  to  pervert 
any  real,  helpful  reform  attitude.     So  long  as  we  think 


126  TRUSTS  AND   THE   PUBLIC 

a  thing  is  bad  we  see  only  bad  in  it,  and  seek  to  abol- 
ish it  instead  of  recognizing  that  in  itself,  at  the  core, 
it  is  all  right  and  only  needs  improving  in  its  methods 
and  character.  This  makes  all  the  difference  in  how 
we  see  and  therefore  how  we  treat  the  subject. 

This  very  mistake  has  more  to  do  with  the  angry 
conflicts  between  organized  labor  and  organized  capi- 
tal than  any  other  one  thing.  It  begets  the  spirit 
among  the  laborers  on  the  one  hand  that  the  capitalist 
is  an  arrogant  monopolistic  oppressor,  and  on  the 
other  hand  it  begets  the  feeling  and  idea  among 
employers  that  the  laborers  are  ignorant,  gullible 
weaklings,  led  by  the  nose  by  a  few  idle  and  design- 
ing demagogues  who  seek  only  to  stir  up  strife  that 
they  may  have  an  easy  living,  with  prominence  and 
good  pay. 

It  is  peculiar  that  labor  struggles  are  becoming 
more  and  more  struggles  over  the  rights  of  unions  and 
recognition  of  unions  than  over  strictly  economic 
propositions.  The  great  Carnegie  conflict,  which  con- 
stitutes such  a  sad  page  in  the  industrial  history  of 
Pennsylvania,  was  largely  a  war  on  this  point.  The 
great  fight  in  Australia  a  few  years  ago  was  also  a 
real  war,  not  over  wages,  but  over  recognition.  In 
writing  of  the  leaders  of  the  strike  at  the  Broken  Hill 
Mines  in  Australia,  the  economist  to  whom  I  refer 
quotes  this  description  of  the  leaders  who  had  been 
sent  to  jail  because  of  their  part  in  the  strike  : 

"  The  leaders,  who  are  now  serving  sentences  in  jail, 
showed  themselves  to  be  professional  agitators  pure 
and  simple.  Possessed  of  the  gift  of  fluent  speech, 
these  men,  not  miners  by  calling  at  all,  had  foisted 
themselves  upon  the  workers'  associations,  and  by  the 


THE   state's   relation   TO   LABOR  12/ 

rhetorical  trick  of  inflaming  envious  passions  and  stir- 
ring up  strife  between  the  employers  and  the  employed, 
had  soon  attained  to  positions  of  personal  ascendency, 
the  toleration  of  which  among  large  bodies  of  fairly- 
educated,  self-respecting  workingmen  is  almost  incred- 
ible. The  strike  was  the  very  opportunity^  desired 
by  the  leaders.  At  one  bound  they  became  persons 
of  public  importance,  issuing  fierce  manifestoes,  having 
their  speeches  telegraphed  across  a  great  continent, 
visiting  their  pickets  like  generals  in  the  field,  being 
huzzaed  by  the  mob  as  they  passed  along  the  streets, 
and  generally  living  in  a  constant  vapor-bath  of  self- 
esteem  and  servile  flattery.  All  these  are  simply  the 
necessary  preliminaries  to  securing  a  seat  in  Parlia- 
ment, and  what  to  a  man  of  the  working  classes  is  a 
very  large  income,  $300  per  annum,  with  no  real 
hard  work  to  do,  with  free  railway  traveling  and  invi- 
tations to  official  dinners." 

I  refer  to  this  simply  to  show  the  spirit  in  which, 
this  movement  is  viewed.  It  is  unquestionably  true 
that  what  the  author  says  applies  to  some  individual 
cases  in  the  labor  movement.  It  applies  to  quite  as 
large,  and  I  think  a  very  much  larger,  number  in  pol- 
itics. There  are  more  demagogues  on  the  stump  at 
every  election  in  the  interest  of  regular  political  work 
in  any  one  state  than  the  whole  labor  movement  of  the 
United  States  together  ever  had  at  one  time,  or  perhaps 
in  its  whole  history.  This  is  the  spirit  of  unfairness, 
of  hostility,  not  the  spirit  of  understanding  and  recog- 
nizing the  true  inwardness  of  the  case.  It  is  this  very 
spirit  which  makes  the  demagogues.  It  is  this  very 
spirit  of  hostility  against  organization  jper  se  that 
makes  the    laborers   cling  together  and   follow   the 


128  TRUSTS   AND   THE   PUBLIC 

demagogues,  because  they  are  at  least  on  their  side. 
We  put  up  with  everj^thing  in  the  face  of  the  enemy, 
and  to  the  extent  that  the  employing  class  and  the 
literary  representatives  of  the  employing  class  exhibit 
this  spirit  they  make  the  laborers  feel  that  the  employ- 
ers are  their  enemies. 

This  is  all  a  mistake,  as  I  have  said  a  great  many 
times  ;  and  if  I  had  the  power  I  would  write  it  on  the 
sky,  that  no  man  should  escape  reading  it,  because  it 
is  fundamental.  It  has  to  do  with  the  spirit  of  the 
great  labor  conflict,  and,  as  I  have  said,  the  labor 
movement  as  a  movement  is  inevitable  in  the  nature 
of  our  present  industrial  society,  and  therefore  it  must 
of  necessity  be  organized  in  order  to  be  orderly,  and  if 
it  must  be  organized  and  orderly  then  its  organization 
and  its  organized  representatives  must  be  recognized  ; 
recognized  as  respectable,  recognized  as  legitimate  del- 
egates of  their  class,  of  their  industry,  just  as  much  as 
the  governor  of  a  state  is  the  representative  of  the 
people  for  the  time  being,  though  sometimes  he  is  a 
fool  and  sometimes  a  demagogue  and  a  humbug.  The 
hope  of  getting  a  better  governor  is  to  appeal  to  the 
good  sense  of  the  people  who  elect  him,  and  suggest  a 
better  one.  The  hope  of  getting  better  representatives 
among  the  labor  organizations  is,  first,  to  get  the  con- 
fidence of  the  great  mass  of  the  laborers  that  we  are 
not  hostile  to  them  and  their  organization  as  such,  and 
then  to  encourage  them  to  act  through  representatives, 
and  point  out  that  the  more  intelligent  and  capable 
their  representatives  the  better  will  their  interests  be 
guarded,  and  the  more  frequently  will  they  succeed  in 
getting  their  rational  demands  conceded  without  the 
tumult  and  loss  and  disadvantages  of  strikes. 


THE   state's    relation   TO    LABOR  1 29 

It  should  be  a  part  of  sound  political  doctrine  then, 
to  recognize  this  general  condition,  and  by  that  I  mean 
not  so  much  that  laws  are  needed,  but  that  it  should 
go  without  question  that  the  rights  of  organized  labor 
are  to  be  recognized  and  treated  with  just  as  much  as 
the  individual  rights  of  citizens ;  that  this  shall  be  a 
part  of  our  political  thinking,  and  that  our  legislatures, 
no  matter  of  what  party,  and  our  governors  or  other 
executives,  shall  act  upon  this  general  assumption. 

With  this  attitude  once  established  the  question  is  : 
What  then  ought  the  state  to  do  ?  What  can  it  do  in 
the  line  of  its  legitimate,  permanent  functions  ?  It  is 
not  my  purpose  here  to  name  a  specific  platform,  for 
that  is  an  ever-varying  thing;  but  it  is  rather  to 
outline  what  I  regard  as  the  field  of  the  state's  action. 
There  are  certain  kinds  of  things  that  the  community 
can  do  and  must  do,  in  view  of  the  fact  that  laborers 
have  lost  the  right,  by  the  very  force  of  industrial 
evolution,  to  act  individually.  They  must  now  be 
treated  collectively,  and  there  are  a  great  many  things 
that  can  be  exacted  collectively  as  well  by  the  laborers 
through  their  organizations  as  they  can  by  the  state 
through  political  institutions.  Here  we  come  to  the 
sort  of  objections  that  have  become  classic  in  the  litera- 
ture of  political  economy.  The  assumption  is  gener- 
ally made,  or  at  least  too  generalh^  in  the  spirit  to 
which  I  have  referred,  that  the  individual  is  the  only 
proper  person  to  contract  for  all  his  industrial  con- 
ditions. This  is  put  forth  as  a  conclusive  reason 
against  all  industrial  legislation  directly  affecting  the 
laboring  class. 

Take  the  conspicuous  case,  for  instance,  of  the  hours 
of  labor.  The  writer  to  whom  I  have  referred  lays 
9 


I30  TRUSTS  AND   THE  PUBLIC 

down  this  proposition  as  an  axiom  : — "  Business  pros- 
pers in  the  absence  of  legal  interference,  except  to 
simply  provide  for  justice  and  freedom."  He  gives  as 
an  illustration — and  I  quote  this  because  it  is  typical  of 
much  of  the  respectable  literature  on  the  subject, — the 
case  of  the  right  of  the  laborer  to  be  unhampered  by 
legislation.  Time,  he  says,  is  the  laborer's  capital,  it  is 
the  one  thing  which  the  laborers  have  as  much  of  as 
the  rich. 

Now,  that  is  the  very  reason  it  is  not  capital.  To 
say  the  poor  have  as  much  capital  as  the  rich  is  to  say 
something  worse  than  silly.  Capital  is  wealth,  and 
any  sort  of  hair-splitting  and  quibbling  which  calls  a 
thing  capital  which  the  poor  have  as  much  of  as  the 
rich  is  mere  talk  without  meaning.  The  poor  have 
as  much  sunshine  as  the  rich ;  sometimes  they  have 
more  than  they  need, — they  are  forced  to  stay  in  it 
too  long.  Shall  we  say  then  that  the  poor  are  as  well 
off  as  the  rich  because,  of  the  very  indispensable  re- 
quirements of  life — air  and  sunshine, — they  have  as 
much  ?  The  occupant  of  the  East  Side  tenement  has 
as  much  time  as  Rockefeller.  Here  is  a  specimen  of 
that  kind  of  reasoning  : — 

"  Time  is  the  one  thing  that  all  share  alike.  Unlike 
nearly  everything  else,  the  poor  have  the  same  amount 
as  the  rich.  It  is,  in  fact,  the  capital  of  the  laboring 
man.  By  Natural  Law,  he  has  his  full  time  to  dispose 
of  as  he  may  think  best.  But  when  he  asks  for  an 
artificial  law,  which  forcibly,  under  all  circumstances, 
will  deprive  him  of  the  use  of  a  portion  of  his  own 
productive  power,  as  by  an  '  eight-hour  law,'  he  di- 
minishes by  so  much  his  available  reserve  and  renders 
himself  poorer.     This  is  the  real  sum  and  substance 


THE   state's   relation  TO   LABOR  13I 

of  restrictive  legislation  regarding  hours  of  labor, 
whenever  applied  to  adults." 

I  would  not  quote  this  merely  because  it  is  in  a  book 
on  Tlie  Political  Economy  of  Natural  Law,  if  it  did 
not  reflect  so  completely  a  general  attitude  and  argu- 
ment presented  on  the  subject  of  the  state's  duty  to 
labor.  In  Massachusetts,  for  instance,  the  most  ad- 
vanced state  in  the  Union  on  that  subject,  the  Ark- 
wright  Club,  which  is  a  club  of  New  England  manu- 
facturers, has  recently  issued  a  pamphlet  prepared  by 
S.  I^.  D.  North,  Secretary  of  the  Wool  Manufacturers' 
Association,  especially  to  show  the  injury  to  labor  of 
the  shortening  of  the  working  day. 

One  would  think  that  experience  would  count,  but 
it  seems  not  to  count  against  a  stereotyped  habit  of 
thinking.  For  nearly  one  hundred  years  the  world 
has  been  experimenting  on  this  very  subject.  It  be- 
gan in  England  in  1802.  Ever  since  then  all  civilized 
countries,  not  excluding  Kussia,  have  done  something 
in  the  direction  of  shortening  the  working  day  by 
legislative  enactment,  and  in  no  case  has  the  experi- 
ment diminished  "  by  so  much  "  the  laborer's  "  avail- 
able reserve,"  as  the  writer  I  have  been  quoting  puts 
it,  and  rendered  him  poorer.  In  other  words,  in  no 
instance  has  the  laborer  been  poorer  or  in  any  way 
injured.  On  the  contrary,  the  whole  history  of  the 
subject  is  the  history  of  an  improvement  in  the  laborer's 
condition,  in  his  wages,  in  his  social  life  and  habits,  in 
his  intelligence,  in  his  quality  of  citizenship  and  per- 
sonal manhood.  The  assumption  that  time  is  the 
laborer's  capital  is  mere  sophistry. 

As  a  matter  of  fact,  the  laborer  has  very  little 
capital.    The  laborer  has  labor  to  sell,  and  the  estab- 


132  TRUSTS  AND   THE   PUBLIC 

lished  rule,  over  which  he  has  little  control,  by  which 
that  labor  is  sold  is  just  the  same  rule  as  that  by  which 
hats,  coats,  iron,  lead,  leather  or  cloth  are  sold,  viz. : 
on  the  basis  of  marginal  cost,  and  the  cost  to  the 
laborer  is  not  the  hours  there  are  in  each  revolution 
of  the  earth,  it  is  not  the  twenty -four  hours  at  his  dis- 
posal, but  the  cost  is  the  social  expense  of  his  living. 
It  makes  no  difference  whether  he  has  eight  hours' 
service  to  sell  each  day  or  eighteen.  If  a  group  of 
laborers  can  live,  without  social  ostracism,  on  twenty 
cents  a  day,  then  twenty  cents  a  day  is  what  they  will 
command,  and  no  more.  If,  through  social  education 
and  opportunity  and  personal  development,  the  social 
life  which  their  surroundings  demand  cannot  be  sup- 
plied for  less  than  two  dollars  a  day,  they  will  get 
two  dollars,  whether  they  have  eight  hours  or  eight- 
een. It  is  not  true,  in  short,  and  never  was,  that  a 
man's  wages  increase  in  proportion  to  the  number  of 
hours'  labor  he  can  sell  each  day.  On  the  contrary, 
they  often  increase  as  the  hours  diminish  ;  not  be- 
cause they  diminish,  however,  but  because  he  is  a  more 
valuable  social  unit. 

IS'ow,  the  duty  of  the  state  is  to  contribute  everything 
which  well  help  make  the  laborer  a  more  valuable  social 
factor  in  the  community.  Whatever  contributes  to  that 
is  for  the  public  welfare,  as  well  as  for  the  welfare  of 
the  individual  laborer  himself.  The  state  is  interested 
in  producing  a  high  type  of  citizenship,  because  a  high 
type  of  citizenship  gives  the  best  security  to  all  in- 
stitutions of  society.  It  gives  the  highest  type  of 
civilized  culture,  and  the  least  possible  need  of  repress- 
ive institutions.  The  state,  I  repeat,  is  interested  in 
producing  a  high  type  of  manhood.    Whatever  will 


THE   state's    relation   TO   LABOR  1 33 

contribute  to  that  will  contribute  to  the  welfare  of 
all  classes  in  the  community. 

There  are  many  things  that  the  laborers  can  do  to 
promote  this.  They  can  organize.  They  can  demand 
from  their  employers  and  from  the  community  many 
things  by  voluntary  effort,  by  organized  demand. 
There  are  many  things,  however,  that  they  cannot  do, 
neither  individually  nor  in  their  voluntary  organiza- 
tions, as  well  as  the  state  can  do  these  things  for  them. 
It  is  these  particular  things,  or  this  class  of  things,  that  it 
is  the  state's  duty  to  furnish.  They  are  always  in  the 
line  of,  as  1  have  said,  opportunity.  The  instance  just 
referred  to,  of  shortening  the  hours  of  labor,  is  one  of  the 
most  conspicuous  of  this  kind.  "Why  ?  Why  should  the 
state  care  about  how  long  the  laborers  work  %  Because 
that  has  a  great  deal  to  do  with  the  possible  social  life 
of  the  laborers,  and  thus  it  has  a  great  deal  to  do  with 
their  opportunities  for  education,  for  culture,  for  in- 
dividual expansion  ;  in  a  word,  with  their  possibilities 
of  social  improvement.  The  conditions  under  which 
laborers  work,  the  sanitary  conditions,  the  protection 
of  machinery,  are  of  great  social  as  well  as  health  pro- 
tective importance.  To  see  that  these  conditions  are 
wholesome,  cheerful,  encouraging,  is  a  part  of  the  pro- 
tective function  of  the  public.  It  cannot  always  be 
demanded  by  the  laborers  themselves ;  they  cannot 
always  reach  this  through  their  organizations.  Then 
how  can  it  and  should  it  be  reached  ?  Through  their 
action  at  the  ballot  box. 

There  are  many  reasons  why  this  is  a  legitimate 
part  of  the  duty  or  function  of  the  state  with  regard 
to  labor.  In  the  first  place,  employers  are  not,  in  the 
nature  of  things,  likely  to  see  these  necessities.     They 


134  TRUSTS   AND   THE   PUBLIC 

come  in  their  waj^  The  things  that  they  see  are  the 
economies,  the  conditions  that  make  for  profits,  and 
for  successful  conducting  of  the  business.  That  which 
aflPects  the  mere  personality  of  the  laborers,  the  social 
conveniences,  the  psychological  influences  surrounding 
laborers,  is  least  likely  to  impress  the  employers. 
These  things  are  observed  more  frequently  by  people 
who  have  better  and  higher  ideas  of  life  and  possible 
social  conditions.  To  the  employers,  at  first,  all  such 
changes,  like  shortening  the  hours  of  labor,  boxing  of 
machinery,  furnishing  fire-escapes  and  adding  expen- 
sive appointments  to  the  workshop,  all  mean  increased 
outlay,  and  this  increases,  at  least  for  the  time,  the 
cost  of  production.  If  one  manufacturer,  as  the  result 
of  a  strike,  is  forced,  for  instance,  to  make  a  large  out- 
lay for  things  which  do  not  immediately  contribute  to 
an  increased  product,  it  has  the  effect  of  temporarily 
putting  him  at  a  disadvantage  in  competing  with  his 
neighbors  who  are  getting  along  without  these  outlays. 
That  is  the  first  circumstance  which  brings  resistance 
on  the  part  of  the  employer.  But  when  the  state  says  : 
"  You  shall  have  fire-escapes  at  every  window  or  on 
every  floor,  you  shall  have  certain  methods  of  ventila- 
tion, even  though  it  involves  a  great  cost,  you  shall 
have  all  machinery  guarded,  no  matter  if  it  costs  ten 
per  cent,  more,"  and  so  on,  it  says  it  to  them  all.  It 
says,  these  are  the  conditions  under  which  this  industry 
shall  be  conducted.  That  puts  no  one  employer  to  a 
disadvantage  with  his  competitors.  If  every  manu- 
facturing concern,  for  instance,  is  restricted  to  eight  or 
nine  instead  of  ten  or  eleven  or  twelve  hours  a  day,  no 
one  manufacturer  is  at  a  disadvantage  on  that  account. 
If  every  corporation   is  compelled   to    spend  ten   or 


THE  state's  relation  TO  LABOR      1 35 

twenty  thousand  dollars  for  improvements  and  con- 
veniences in  the  workshops,  it  is  at  no  special  disad- 
vantage because  all  its  competitors  have  to  do  the 
same.  This  is  not  interfering  with  the  freedom  of  in- 
dustry. It  is  not  affecting  the  opportunities  of  the 
employer.  It  is  simply  determining  the  plane  on 
which  business  shall  be  conducted  and  competition  take 
place.  It  simply  saj^s  :  "  On  this  civilized  plane  only 
shall  this  class  of  business  be  conducted  in  this  com- 
munity." This  includes,  too,  all  the  protective  legisla- 
tion of  the  factory  acts,  employers'  liability  acts,  etc.^ 
which  have  been  developed  to  perfection  in  England 
and  ought  to  be  enacted  in  every  state  in  this  country 
where  factory  methods  prevail. 

The  same  principle  comes  right  into  our  city  life. 
Take  the  sweatshop,  for  instance.  There  we  have  a 
system  of  employment  which  is  at  once  undermining  the 
health  and  stultifying  the  social  life  of  the  workers, 
besides  creating  a  repressing  influence  on  all  legiti- 
mate workshop  production.  The  theory  that  every 
individual  has  a  right  to  dispose  of  his  own  labor  in 
his  own  way,  and  make  whatever  use  of  his  time  and 
under  whatever  conditions  he  pleases,  provided  he  does 
not  interfere  with  the  rights  of  other  people,  is  capable 
of  a  great  deal  of  sophistical  application.  It  is  used 
in  defense  of  the  sweatshop  system.  This  system  con- 
verts the  homes  of  our  laborers  into  workshops,  and 
somebody  says  :  "Who  has  the  right  to  interfere  and 
say  what  a  man  shall  do  in  his  own  home  ?  Long  ago 
civilization  decided  that  the  state  has  the  right  to  in- 
terfere  with  what  shall  be  done  anywhere  and  every- 
where. The  state  already  says  that  certain  kinds  of 
plumbing  and  ventilation  shall  exist  in  every  city  home. 


136  TRUSTS   AND   THE  PUBLIC 

Why  should  not  a  person  be  permitted  to  live  without 
ventilation  and  plumbing  in  his  house,  and  without  any 
modern  sanitary  appointments  at  all,  if  he  chooses  ? 
The  answer  is,  because  it  is  inimical  to  the  welfare  of 
society,  and  no  one  individual,  because  of  his  low  de- 
sires or  meager  wants  or  traditional  barbarism,  can  be 
permitted  to  live  under  conditions  which  jeopardize 
directly  or  indirectly  the  health  and  well-being  of 
other  members  of  the  community.  There  are  hun- 
dreds of  families  who  would  be  perfectly  willing  if  they 
had  the  smallpox  to  go  right  on  sending  other  members 
of  their  family  to  school  or  to  the  workshop,  or  visit 
their  neighbors  and  have  their  neighbors  visit  them, 
and  they  growl  because  necessity  says  they  shall  be 
quarantined.  But  the  point  is  now  reached  at  which 
everybody  demands  that  quarantine  shall  be  enforced. 
What  does  that  mean  ?  It  means  that  the  liberty  of  these 
poeple  shall  stop  short  at  that  point ;  that  the  highest 
civilization  guarantees  the  greatest  freedom  for  all, 
and  in  guaranteeing  that  liberty  it  restricts  the  liberty 
of  anybody  to  do  that  which  shall  interfere  with  the 
welfare  of  all. 

The  sweatshop  is  clearly  a  case  of  social  injur}^ 
The  conditions  under  which  manufacture  is  conducted 
in  these  dens,  as  I  have  said,  are  detrimental  to  the 
health  as  well  as  depressing  to  the  social  condition  of 
the  entire  class.  As  a  matter  of  public  policy  it  is  the 
duty  of  the  state  to  interfere  in  behalf  of  the  laboring 
class.  Why  ?  Because  the  laborers  cannot  interfere 
for  themselves.  The  laborers  cannot  make  a  personal 
appeal  to  these  ignorant  Poles  who  huddle  in  tenement 
houses  and  live  and  work  and  eat  and  sleep  on  the 
benches  with  their  tailoring.     They  cannot  enforce  a 


THE  state's   relation   TO    LABOR  1 37 

reform  because  they  have  no  legal  right  to  enforce  in- 
dustrial and  social  conditions  upon  others.  It  is  the 
state  only  that  can  intervene,  and  it  is  clearly  the  state's 
duty  to  do  so. 

This  is  a  part  of  the  protective  function  of  the  state, 
the  same  as  it  is  a  part  of  the  duty  of  the  state  to  en- 
force educational  conditions  upon  the  children  of  the 
community.  Why  should  the  state  insist  upon  educa- 
tion ?  Because  education  is  a  part  of  the  preparation 
for  good  citizenship,  and  individual  initiative  is  not 
strong  enough,  voluntary  organization  is  not  adequate 
to  give  it ;  the  state  alone  is  the  power  which  can 
enforce  this  educational  and  therefore  protective  influ- 
ence. 

The  relation  of  the  state  to  labor,  then,  is  not  only 
very  important  but  it  is  not  unclear  or  difficult  to  un- 
derstand, if  we  will  recognize  a  few  fundamental  facts 
regarding  it.  First,  that  much  can  be  done  by  laborers 
to  improve  their  condition  by  voluntary  association, 
and  it  is  the  duty,  therefore,  of  the  public  and  of  the 
state  to  recognize  the  legitimacy  of  that  association. 
Second,  that  there  are  a  large  number  of  things  which 
the  laborers  cannot  do  individually,  because  of  their 
changed  industrial  condition ;  and  which  they  cannot 
do  by  voluntary  association  because  of  their  limited  in- 
fluence and  lack  of  authority ;  and  which,  therefore, 
must  be  done  by  the  state.  These  needs  are  constantly 
arising.  They  cannot  be  particularized  at  any  given 
time  as  permanently  including  the  whole  docket.  They 
are  constantly  arising  as  new  conditions  are  created, 
but  the  general  duty  is  very  clear,  and  it  is  that  the  state 
should  constantly  exercise  its  influence  and  author- 
ity in  determining  the  conditions  under  which  industries 


138  TRUSTS  AND   THE   PUBLIC 

shall  be  conducted,  contracts  be  made,  and  laborers,  as 
well  as  everybody  else,  live. 

This  is  a  wide  field  to  cover,  though  the  principle  of 
action  is  simple.  It  is  a  wide  field  because  the  expe- 
riences are  constantly  increasing  and  interests  con- 
stantly multiplying  in  which  the  capitalist  employer, 
in  the  effort  to  compete  and  develop  new  methods  and 
get  the  maximum  product,  tends  to  ignore  the  need 
of  improvements  in  the  industrial  or  labor  side  of  these 
new  conditions.  It  is  therefore  of  paramount  impor- 
tance to  the  public  policy  of  the  countrj'^  that  this  ra- 
tional and  permanent  relation  of  the  state  to  labor  be 
recognized  as  a  part  of  our  political  system  and  as  a 
part  of  the  necessary  function  of  government ;  so  that 
it  shall  nob  be  opposed  on  abstract  principle,  as  econo- 
mists and  employers  are  in  the  habit  of  doing,  but  that 
the  question  shall  ever  be,  will  it  produce  the  effect  de- 
sired ?  Is  the  reform  a  needed  one  ?  Is  it  along  the 
line  of  guarding  the  opportunities  for  and  possibilities 
of  gradual  self-improvement  for  the  laborers  ?  If  it 
is,  no  considerations  of  individual  capital  should  stand 
in  the  way,  and  if  we  always  make  the  conditions  gen- 
eral, as  the  state  must,  capital  is  not  injured  by  the  ac- 
tion, because,  as  I  hava  said  before,  whatever  affects 
everybody  is  not  a  relative  disadvantage  to  anybody. 
That  is  why  it  is  important  that  so  many  of  these  re- 
forms, which  are  perfectly  feasible,  perfectly  rational, 
and  indispensable  to  the  progress  of  society,  must  be 
made  by  the  state,  because  the  state  alone  can  make 
them  general,  and  it  is  their  general  application  that 
eliminates  all  individual  disadvantage. 

If  this  policy  were  intelligently  recognized  and 
adopted  it  would  do  more  than  almost  anything  else  to 


THE  state's  relation  TO   LABOR  1 39 

eliminate  the  irregularity  and  unreason  from  the 
often  impetuous  demands  of  labor.  When  the  legit- 
imacy of  the  principle  is  recognized,  discussion  of  the 
details  can  proceed  with  reason  and  sense.  Knowledge 
of  the  case  must  then  be  insisted  upon  for  the  repre- 
sentatives of  labor,  and  this  will  make  necessary  more 
intelligent  leaders  on  the  labor  side.  When  it  is  a  rec- 
osrnized  fact  that  the  state  has  a  legitimate  function 
in  relation  to  labor ;  that  the  principle  of  these 
demands  is  not  denied,  but  that  it  is  only  a  question  of 
the  facts  in  the  case,  then  there  is  no  longer  any  ex- 
cuse on  the  part  of  the  laborers  to  cry  "  enemy  "  at 
every  capitalist,  and  there  is  less  room  for  demagogues 
to  inflame  the  masses  with  charges  of  capitalistic  hos- 
tility. The  laborers  then  would  find  that  their  cause 
rested  not  upon  mere  antagonism  to  capital,  but  upon 
proving  the  merits  of  the  case,  and  this  would  send  home 
each  time  the  necessity  of  intelligent  conception  and  un- 
understanding  of  their  own  condition.  They  would 
learn  from  time  to  time  that  their  cause  was  lost  by  the 
ignorance  or  incapacity  of  their  representatives,  and  not 
by  an}^  general  antagonism  of  the  legislatures  or  the 
community  on  the  subject.  Thus,  competency  instead 
of  demagogy  would  become  the  required  quality  in 
labor  representatives,  and  this  would  tend  rapidly  to 
lift  the  discussion  of  labor  problems  from  the  plane  of 
physical  combat  to  that  of  intelligent,  economic  con- 
troversy. 


X. 

THE  EKA  OF  TRUSTS  * 

It  is  manifest,  even  to  casual  observers,  that  we  are 
entering  upon  an  industrial  era  of  trusts.  Within  a 
year,  and  especially  during  the  last  six  months,  the  ten- 
dency towards  reorganization  and  consolidation  of  a 
number  of  smaller  industries  into  large  ones  has 
amounted  almost  to  a  stampede,  l^othing  like  it  was 
ever  known  before  since  the  origin  of  the  factory  sys- 
tem. If  this  movement  continues  during  the  present 
year  at  anything  like  the  rate  it  has  been  going  the  last 
six  months,  the  leading  industries  of  this  country  will 
have  taken  on  the  trust  form  of  organization.  Whether 
this  movement  will  be  permanent  or  will  arouse  public 
opposition  which  will  bi'ing  its  defeat  through  legisla- 
tive restriction,  will  depend  almost  entirely  upon  the 
wisdom  of  the  capitalists  themselves. 

The  movement  itself  is  an  entirely  natural  one  and 
is  wholly  in  line  with  economic  progress,  provided  it  is 
not  uneconomically  directed.  If  these  re-organizations 
are  conducted  on  sound  business  principles,  as  in  the 
adoption  of  new  machinery,  viz. :  to  create  profits  by 
the  introduction  of  economies  in  administration  and 
sharing  these  profits  with  the  community  through  a 
reasonable  lowering  of  prices,  there  will  be  no  serious 

1  Published  in  Ounton's  Magazine  of  March,  1899. 
140 


THE   ERA   OF  TRUSTS  I4I 

danger  of  political  molestation.  But  if  the  re-organiz- 
ation becomes  a  speculative  game  to  take  advantage  of 
an  industrial  sentiment  for  the  purpose  of  monopolizing 
certain  lines  of  industry  and  "  gouging  "  the  public  by 
putting  up  prices,  to  pay  dividends  on  abnormal  capi- 
talization for  promoters'  bonuses,  a  social  opposition 
which  will  take  on  a  political  form  is  pretty  certain  to 
arise.  There  is  already  an  antagonism  to  trusts,  from 
sheer  economic  prejudice,  largely  born  of  socialistic  an- 
tagonism to  capital  and  partly  stimulated  by  popular 
aversion  to  the  new  ;  but,  on  the  whole,  thus  far  trusts 
have  been  fairly  economic  in  their  polic3\  In  a  few  in- 
stances they  have  departed  from  business  principles  and 
tried  to  establish  uneconomic  monopolies,  and  in  every 
such  instance  they  have  come  to  grief.  But  this  un- 
wholesome effort  has  created  an  unfavorable  impression 
in  the  public  mind.  All  the  trusts  and  large  concentra- 
tions which  have  become  permanently  established  have 
contributed  very  largely  to  the  improvement  of  the 
products  they  furnish,  and  greatly  reduced  the  price. 

It  is  characteristic  of  all  these  large  concerns,  which 
have  followed  sound  business  principles  and  shared  their 
profits  with  the  public  by  reducing  the  cost  of  the  pro- 
duct, that  they  are  in  the  long  run  the  most  successful 
establishments.  Moreover,  these  concerns  are  rapidly 
outgrowing  public  antagonism.  But,  on  the  other  hand, 
a  number  of  the  industries  now  going  through  the 
process  of  reorganization  are  following  the  speculative, 
monopolistic,  rather  than  the  economic  method  of  pro- 
cedure. They  are  using  the  concentration  of  the  indus- 
try as  a  means  not  only  to  lessen  the  expense  of  pro- 
duction but  also  to  put  up  the  price  of  the  product  to 
the  community.    I^Tow,  this  is  not  merely  uneconomic 


142  TRUSTS  AND   THE  PUBLIC 

but  it  is  against  the  public  welfare  and  will  not  long  be 
tolerated — and  it  should  not.  The  result  of  this  policy, 
if  it  is  pursued,  will  be  to  array  the  public  through  the 
legislatures  against  the  trust  movement  altogether,  and 
thus  work  great  injury  to  the  community  in  general. 

"With  the  return  of  prosperity  the  universal  impulse 
is  again  to  make  profits.  Confidence  has  everywhere 
been  revived.  The  demand  for  goods  is  rapidly  in- 
creasing. New  investments  to  supply  anticipated  de- 
mands are  being  freely  made.  In  short,  all  the  signs 
point  to  another  era  of  prosperity.  But  the  people 
have  become  accustomed  to  the  low  prices  established 
during  the  era  of  depression,  and  it  is  more  than  prob- 
able that  any  attempt  to  reestablish  former  profits  by 
reinaugurating  former  prices  would  greatly  check,  if 
it  did  not  destroy,  the  present  business  boom.  Profits 
once  lost  by  falling  prices,  except  under  the  sudden 
pressure  of  war  or  depreciated  currency,  can  never  be 
permanently  reestablished  by  raising  prices,  but  must 
necessarily  come  through  new  profit-creating  methods, 
either  in  the  form  of  improved  machinery  or  more 
economic  type  of  organization.  Though  not  much 
understood,  this  fact  is  universally  felt  throughout  the 
industrial  world. 

It  is  true  throughout  society  that  every  class  or 
group  has  to  suffer  for  the  sins  of  its  most  injudicious 
or  hot-headed  members.  Trade  unionists  as  a  class 
labor  under  suspicion  and  distrust,  and  encounter  con- 
siderable open  opposition,  because  of  the  foolish  and 
ignorant  acts  of  a  few  hot-headed  leaders  who  become 
conspicuous  at  the  moment  of  a  strike.  So  it  is  with 
capitalists.  A  few  mean,  unreasoning,  and  perhaps 
unthinking  capitalists,  who  are  only  up  to  the  level  of 


THE   ERA  OF  TRUSTS  I43 

making  business  a  grand  game  of  grab,  bring  discredit 
in  the  popular  mind  upon  the  whole  employing  class. 
Laborers  and  their  sympathizers  in  the  community 
follow  the  same  rule  that  employers  do  toward  labor 
unions,  and  judge  the  whole  class  by  their  worst  speci- 
mens. 

This  is  true  of  the  public's  attitude  towards  all  new 
movements,  and  the  present  trust  movement  will  be 
no  exception.  If  a  few  concerns  are  unfortunate 
enough  to  be  under  a  leadership  sufficiently  short- 
sighted to  take  advantage  of  the  temporary  oppor- 
tunity the  new  organization  affords  to  tax  the  public 
by  increased  prices,  there  is  sure  to  be  a  vigorous 
crusade  against  the  new  movement.  It  will  not  be 
confined  to  the  few  indiscreet  concerns  that  have  not 
learned  to  recognize  the  highest  business  success,  but 
it  will  be  directed  against  capital  and  large  organiza- 
tions in  general. 

The  tin-plate  trust  is  one  of  these  offensive  examples.^ 
This  is  an  industry  which  practically  could  not  have 
existed  in  this  country  but  for  the  legislative  aid  of 
the  public.  Until  the  tariff — a  very  high  one  at  first 
— was  placed  upon  foreign  tin,  the  tin-plate  industry 
had  no  existence  in  the  United  States.  It  has  been 
born  and  nurtured  by  the  protective  aid  the  public  has 
given  it.  Its  very  existence  is  due  to  the  good  will 
and  political  good  sense  of  the  United  States.  The 
tin-plate  trust  is  one  of  the  "  fool  examples  "  of  using 
the  trust  organization  to  put  up  the  price.  Of  course 
it  would  be  unwise  for  the  public  to  hamper  a  really 
helpful  industrial  movement  because  speculative"  grab- 

1  In  this  connection  see  Chapter  XII.,  "  The  Tin-Plate  Trust." 


144  TRUSTS  AND   THE   PUBLIC 

bers"  get  temporary  possession;  nor  should  a  few- 
mistakes  of  this  kind  be  permitted  to  be  used  effec- 
tively against  the  protective  tariff  as  a  general  policy. 
Nevertheless  it  would  be  perfectly  safe  and  the  part 
of  good  policy  for  congress  to  pass  a  law  empowering 
and  instructing  the  secretary  of  the  treasury  to  with- 
draw the  protective  duty  from  all  products  the  prices 
of  which  are  raised  by  trust  organizations.  In  short, 
the  moment  a  trust  organization  raises  the  price  of  a 
product  enjoying  any  degree  of  protective  duty,  it 
should  thenceforth  be  put  uj^on  the  free  list  and  be- 
come subject  at  once  to  world  competition.  If  the 
organizers  of  trusts  in  any  line  have  not  economic 
sense  and  public  spirit  enough  to  refrain  from  using 
their  concentrated  power  to  tax  the  public  by  increas- 
ing prices,  tlie  public  should  at  once  withdraw  any 
protective  advantage  it  has  given  to  that  industry. 
The  primary  object  of  protection  is  to  make  it  possible 
to  stimulate  the  development  of  domestic  industries  ; 
but  when  industries  have  become  established  and 
proceed  to  take  advantage  of  this  protection  for 
monopolistic,  price-raising  purposes,  they  should  at 
once  be  thrown  on  their  own  competitive  resources. 
This  woukl  be  in  harmony  with  strictly  economic 
policy,  and  might  have  a  wholesome  effect  upon  the 
movement  of  trust  reorganization. 

We  should  utilize  the  coming  period  of  prosperity  to 
give  to  capital  liberal  profits,  to  laborers  higher  wages, 
and  to  the  public  better  and  cheaper  goods.  If  the 
benefits  of  the  trust  era  are  thus  distributed  it  will  be 
an  era  of  permanent  advance  in  public  welfare  and 
social  harmony  as  well  as  in  economic  organization. 


XI. 

MACHINERY  Al^D  LABOR  DISPLACEMENT  * 

In  taking  up  the  question  of  machineiy  and  labor 
displacement,  I  want  to  discuss  it  with  entire  frank- 
ness, and  as  fully  as  the  time  will  permit.  In  the 
first  place  we  might  as  well  recognize  the  painful  fact 
that  the  ignorance  on  this  subject  is  not  all  on  the  side 
of  the  laborers.  The  capitalists  in  the  main  do  not  dis- 
play more  information  and  general  familiarity  with 
this  topic  than  do  the  laborers.  The  capitalists  know 
that  finally,  under  pressure  of  competition,  to  join  larger 
organizations  is  their  only  salvation.  They  know  that 
this  is  beneficial  to  them,  because  it  saves  their  life,  in- 
dustrially ;  and  therefore  they  think  that  everybody 
who  does  not  know  that  is  to  be  designated  with  a  very 
short  name.  On  the  other  hand,  the  laborers  know 
something.  They  know  that  in  this  struggle  they 
come  up  against  a  great  many  unforeseen  hardships. 
They  know  that  it  is  necessary  for  them  very  frequently 
to  organize,  and  through  their  organizations  do  a  great 
many  things  that  seem  very  irrational  to  the  commu- 
nity, and  they  conclude  that  if  the  employers  cannot  see 
the  wisdom  of  this  they  must  be  very  ignorant  and  are 
equally  entitled  to  be  dismissed  with  a  short  name. 
The  fact  is,  and  it  is  a  painful  one  but  very  vital,  that 

*  Lecture  delivered  in  New  York  City,  April  18th,  1899. 
lo  145 


146  TRUSTS  AND   THE  PUBLIC 

neither  party  seems  to  understand  the  position  of  the 
other,  nor  their  relation  to  the  general  situation. 

The  question  that  I  want  to  consider  is  the  increas- 
ing organization  tendency  of  capital  and  the  actual  ef- 
fect upon  the  community,  including  the  laborers  and 
consumers,  of  this  labor-displacing  and  industry  re-ad- 
justing movement. 

First  of  all,  let  us  inquire  for  a  minute  or  two  into 
the  actual  relation  of  capital  and  labor  to  the  commu- 
nity. Capital  must  be  definitely  recognized  as  capital. 
It  is  not  a  person.  It  has  neither  flesh  nor  blood,  soul 
nor  conscience.  It  is  a  thing.  It  is  capital,  to  be  used 
by  the  capitalist.  The  public  interest  in  the  use  of  this 
tool — capital — is  not  in  its  ownership  but  in  its  products. 

Labor  is  not  a  tool.  Labor  is  the  service  of  individ- 
uals, and  represents  the  great  mass  of  the  community. 
Therefore  labor  and  laborers  cannot  be  considered 
under  any  circumstances  as  the  equivalent  of  tools.  In 
labor  is  embodied  the  conditions  of  civilization.  There- 
fore, while  capital  as  a  tool  should  be  secured  as  cheaply 
as  possible,  and  used  as  long  as  possible,  and  thrown 
away  as  soon  as  it  ceases  to  be  economic,  labor  can- 
not be  so  treated.  Labor  must  be  treated  in  the  pro- 
ductive process  not  as  an  instrument  but  as  a  social 
factor.  The  community,  which  includes  capitalists, 
laborers  and  all  other  elements,  has  also  a  stake  in  this 
movement. 

It  is  quite  clear  that  neither  labor  nor  capital  will  put 
forth  its  best  effort  and  serve  the  community  at  its 
maximum  efficiency  without  a  stimulating  reward.  The 
reward  of  the  capitalist  is  profit — an  increased  incre- 
ment of  wealth.  The  reward  of  laborers  as  laborers 
is  wages.     The  interest  of  the  community  in  the  gen- 


MACHINERY  AND   LABOR   DISPLACEMENT        I47 

eral  result  (which  includes,  as  I  have  said,  capitalists 
and  laborers  and  all  other  social  units)  is  in  the  quality 
and  price  of  the  products.  So  there  Ave  have  the  three 
forms  in  which  the  benefits,  if  any,  accruing  from  cap- 
italistic production  are  distributed  to  the  community  ; 
profits,  wages,  and  diminishing  prices.  The  capitalists 
and  laborers,  therefore,  each  have  two  forms  of  partak- 
ing in  the  results  of  this  movement ;  capitalists  in  prof- 
its, and  in  declining  prices  to  the  extent  of  their  own 
consumption  ;  laborers  in  wages  and  declining  prices, 
and  the  rest  of  the  community  only  in  the  declining 
prices  or  cheapening  of  wealth. 

It  is  commonly  assumed  both  by  capitalists  and 
laborers  that  they  should  have  all  the  gain  there  is 
from  the  application  of  new  methods  to  productive 
enterprises.  The  capitalist  pays  for  the  new  machine, 
perhaps  pays  a  royalty  to  the  inventor ;  and,  with  his 
narrow  view,  thinks  that  all  the  advantage  accruing 
from  that  machine  therefore  belongs  to  him.  If  the 
machine  will  produce  twice  as  much  for  the  same  in- 
vestment as  could  be  produced  before,  he  thinks  that 
is  the  equitable  reward  for  his  ingenuity  in  knowing 
enough  to  buy  the  new  machine. 

The  laborer,  on  the  other  hand,  who  works  the 
machine  and  finds  that  it  will  produce  twice  as  much 
in  an  hour  as  the  old  machine  that  he  used,  imagines 
that  he  is  the  one  entitled  to  all  this  increased  product. 
He  says — not  theoretically  but  actually — : "  I  produced 
twice  as  much  to-day  as  I  did  ten  or  twenty  years  ago,  or 
as  my  father  did  working  at  the  same  industry,  and  I 
only  get  ten  per  cent,  more  in  wages.  I  am  robbed  of  the 
other  ninety  per  cent,  which  I  produce."  This  is  not 
merely  in  the  abstract ;  it  is  the  concrete  statement  that 


148  TRUSTS  AND  THE  PUBLIC 

goes  the  round  and  has  been  going  the  round  for  fifty 
years, — in  fact,  ever  since  machinery  began  to  be  intro- 
duced. A  few  years  ago  the  cotton  operatives  of  Lanca- 
shire sent  a  deputation  to  London  to  interview  a  parlia- 
mentary committee  upon  this  subject,  and  they  pointed 
out  that  their  product  had  been  increased  several  hun- 
dred-fold while  their  wages  had  risen  only  about  fifty 
per  cent., — and  even  so  able  a  statistician  as  Mr.  Giffen, 
then  president  of  the  British  Statistical  Society,  ad- 
mitted the  gist  if  not  the  extent  of  their  complaint, 
and  said  : — "  It  may  be  admitted,  to  begin  with,  that 
there  is  apparent  foundation  for  some  of  the  com- 
plaints. AYorkmen  in  particular  industries  do  not  get 
a  reward  at  all  in  proportion  to  the  increase  of  produc- 
tion in  those  employments.  The  illustration  of  a  cotton 
mill  is  familiar.  A  single  attendant  on  a  number  of 
machines  will  '  produce '  as  much  in  an  hour  as  for- 
merly in  a  year  or  two,  but  his  wages  are  only  double — 
or  perhaps  not  quite  double — what  they  Avere  when  he 
produced  so  much  less." 

"When  a  statistician  and  economist  like  Mr.  Giffen 
admits  this,  it  is  not  surprising  that  the  laborers  should 
insist  upon  it  as  a  matter  of  fact.  However,  tliis  is 
not  merely  an  unjust  and  unreasonable  complaint,  but 
what  the  laborers  expect  in  this  particular  is  absolutely 
impossible.  Economically  it  cannot  be,  and  morally 
it  ought  not  to  be.  So  long  as  it  is  insisted  that  the 
laborer  who  uses  the  new  machine  is  entitled  to  all  the 
increased  product  of  the  machine ;  or,  on  the  other 
hand,  so  long  as  the  capitalist  imagines  that  because 
he  bought  the  new  machine  he  is  entitled  to  all  the 
increased  product  of  it,  there  never  can  be  any  rational 
attitude  on  this  subject.     As  a  matter  of  fact,  both  of 


MACHINERY   AND   LABOR   DISPLACEMENT        149 

these  claims,  as  I  said,  are  economically  and  morally 
erroneous. 

In  the  first  place,  what  has  the  capitalist  done  to 
cause  this  immense  increase  of  jn'oduction  by  this  new 
machine?  He  simply  invested  the  money  in  it  when 
it  became  clear  that  the  investment  would  yield  a 
larger  return  than  an  investment  in  any  other  line  he 
knew  about.  He  did  nothing  to  bring  the  invention 
into  existence  or  to  create  the  social  conditions  that 
made  its  utility  possible.  He  acted  upon  it  wholly 
and  absolutely  as  an  investment. 

On  the  other  hand,  what  did  the  laborer  do  ?  Just 
nothing  at  all.  He  did  not  even  make  the  investment. 
The  chief  thing  he  did  was  to  resist  its  introduction, 
make  it  seem  to  be  as  inefficient  as  possible,  and  for  a 
long  time  declare  that  it  was  no  good,  that  it  would  not 
do  the  work,  even  spoiling  the  work  deliberately  in 
order  to  discredit  the  new  machine.  The  laborer  may 
be  said  absolutely  to  contribute  nothing  at  all  to  the 
new  process,  but  rather  to  act  consciously  as  an  im- 
pediment to  its  success.  Why  should  either  one  of 
these  two,  then,  run  away  with  all  the  advantage  ? 
Certainly  they  should  not. 

What  relation  has  the  community  to  the  matter  ? 
The  community — and  both  capitalist  and  laborer  are 
included  in  this — furnishes  the  great  background  for 
making  this  improvement  possible.  Civilization,  with 
its  growing  and  diversified  demands,  furnishes  the  in- 
creased consumption,  the  market,  which  makes  a  greater 
aggregate  production  profitable.  This  is  the  great  so- 
cial fact  which  society  in  its  aggregate  furnishes,  and 
it  constitutes  at  once  the  opportunity  and  the  incentive 
for  the  new  machinery  or   new   organization  which 


I50  TRUSTS  AND   THE   PUBLIC 

creates  the  larger  output.  Therefore  the  community 
has  a  greater  claim,  and  in  fact  the  greatest  claim,  upon 
the  fruits  of  this  improvement.  The  capitalist,  of 
course,  will  have,  in  his  special  form  of  profits,  a  part 
of  this  gain.  This  he  gets  by  investing  in  the  new 
instrument  before  all  his  competitors  have  got  it. 
The  laborers  as  laborers  have  no  special  claim  upon 
it  other  than  the  claim  their  social  standard  gives  them 
for  higher  wages,  but  as  a  part  of  the  whole  commu- 
nity they  have  a  claim  upon  it  in  the  form  of  reduced 
prices. 

Now,  if  the  capitalist  should  take  it  all  in  profits,  or 
the  laborers  who  work  these  particular  machines  should 
take  it  all  in  increased  wages,  or  even  if  the  particular 
capitalists  and  laborers  (say  in  the  cotton  factories  or 
shoe  factories)  should  take  all  the  advantage  of  these 
machines,  then  the  community  which  had  really  made 
it  possible — all  the  other  capitalists  and  laborers  and 
all  others — would  get  none  of  the  advantages.  That 
would  be  neither  good  economics  nor  good  ethics. 
The  mason  and  the  bricklayer,  the  architect  and  the 
builder,  the  painter  and  designer,  all  are  as  much  en- 
titled to  the  benefits  of  an  invention  in  the  production 
of  shoes  or  of  cotton  cloth  as  the  people  who  happen 
to  work  the  machines  w^hich  create  the  economy.  If 
this  were  not  so,  then  that  great  class  in  the  commu- 
nity, including  most  of  the  agriculturists  and  all  the 
industries  where  new  machinery  is  not  adopted,  Avould 
get  none  of  the  benefits  of  the  great  productive  im- 
provements due  to  the  advance  of  society.  If  this 
were  possible,  progress  itself  would  be  arrested  ;  because 
if  they  could  get  none  of  the  advantages  of  the  appli- 
cation of  science  to  production  they  would  not  and  could 


MACHINERY  AND   LABOR   DISPLACEMENT        151 

not  become  a  part  of  the  great  increased  consuming  force 
of  the  community.  If  the  brickhiyers  and  agricultural 
laborers  and  those  who  work  in  non-machine-using 
industries  could  not  participate  in  the  increased  con- 
sumption of  machine  products  the  market  would  be  so 
small  that  the  improved  machines  could  not  be  used. 
If  nobody  used  cotton  cloth  but  those  who  made  it,  it 
would  have  to  be  made  by  hand,  as  it  was  in  India 
hundreds  of  years  ago.  The  fact  that  society  in  its 
aggregate  develops  the  intelligence  and  inventive  im- 
pulse, and  second  that  it  also  furnishes  the  consuming 
capacity  or  market  demand,  are  the  two  great  facts 
that  make  the  use  of  machinery  possible  ;  and  thus  it 
is  obvious  that  the  products  of  industrial  improvements 
should  be  distributed  throughout  the  community. 
They  should  not,  and  cannot  without  injury  to  the 
community,  be  monopolized  either  by  the  particular 
capitalist  or  the  particular  laborers  who  use  the  im- 
proved methods. 

Clearly,  then,  the  laborer  who  makes  twenty  times 
as  many  shoes  in  a  day  as  his  grandfather  did,  and  the 
weaver  who  weaves  five  hundred  times  as  many  yards 
of  cloth  as  his  grandfather  did  at  the  hand  loom,  can- 
not and  ouo^ht  not  to  ffet  five  hundred  times  as  much. 
His  rise  of  wages  represents  his  direct  demand  upon 
the  sources  of  production,  as  reflected  in  his  increased 
standard  of  living.  The  increased  profits,  which  are 
only  temporary,  are  the  special  reward  of  the  capitalist 
for  his  investment  in  the  new  machine  ;  but,  in  the 
nature  of  economic  law,  the  tendency  of  this  increased 
production  due  to  the  new  machines  is  to  set  the  em- 
ployers competing  one  with  another  for  the  market 
demand  for  these  goods,  and  in  this  competition  the 


152  TRUSTS  AND   THE   PUBLIC 

price  is  lowered.  By  this  lowering  of  the  price  the 
whole  community  shares  the  advantage.  That  part  of 
the  improvement  which  goes  to  increase  profits  stays 
with  the  capitalist  only  so  long  as  he  can  keep  his  lead ; 
that  jDart  which  goes  to  increase  wages  stays  with  the 
laborer,  and  he  keeps  it  forever  ;  and  that  part  which 
comes  in  reduced  prices  comes  to  the  bricklayer  and 
carpenter  and  printer  and  agriculturist  and,  in  short, 
to  the  entire  community,  and  so  the  benefits  of  progress 
in  this  direction  are  distributed  throughout  society. 
That  is,  in  fact,  the  most  equitable  adjustment  of  the 
matter. 

I  mention  this  simply  to  call  attention  to  the  un- 
reasonableness and  injustice,  as  Avell  as  uneconomic 
character,  of  the  demand  that  all  of  this  gain  belongs 
to  the  particular  people  who  happen  to  use  the  new 
instruments.  In  truth,  the  benefit  belongs  to  all  the 
influences  which  produced  the  new  instrument,  and 
the  chief  of  these  is  society  in  its  market  capacit}''. 
Where  society  is  simple  and  non-expensive,  as  in  China, 
this  new  increment  does  not  arise.  The  capitalist  will 
not  invest  his  money  in  a  new  invention.  Why  ? 
Because  he  cannot  sell  its  product.  If  he  does  invest 
he  will  lose  by  it.  Society  furnishes  him  no  market 
background,  no  demand  for  the  results,  and  conse- 
quently his  profits  do  not  come.  The  reason  is  not 
that  the  laborers  are  not  so  willing,  or  that  the  capital- 
ists are  not  so  willing,  in  China  as  in  England  or  the 
United  States,  to  increase  their  output ;  but  it  is  the 
fact  that  society  in  its  aggregate  demand  does  not 
furnish  the  opportunit}''  and  incentive. 

It  is  this  fact,  that  the  greater  part  of  the  increased 
product  of  civilization  goes  to  the  public  in  lower  prices 


MACHINERY   AND    LABOR   DISPLACEMENT        1 53 

rather  than  in  permanently  increased  profits  or  very 
high  wages  in  special  industries,  that  constitutes  the 
great  equitable  element  in  economic  distribution.  As 
I  said,  the  capitalist  gets  his  large  profit  at  first,  in 
proportion  as  he  anticipates  his  competitors  in  intro- 
ducing the  improved  instrument ;  but  as  fast  as  his 
competitors  adopt  the  same  methods  he  has  to  sur- 
render his  great  profits  to  the  community  in  the  lower 
prices  and  create  a  new  margin  by  another  improve- 
ment. So  that,  the  profits  of  the  capitalist  from  any 
given  improvement  are  temporary.  They  are  large  at 
first,  but  necessarily  tend  to  diminish  through  compe- 
tition until  they  reach  the  vanishing  point.  Almost 
every  industry  where  much  machinery  is  employed 
has  gone  through  this  process  several  times  during  the 
last  half  century.  In  the  various  departments  of  iron 
and  steel  manufacture,  and  of  furniture  and  clothing, 
this  cycle  has  been  traversed  several  times.  In  the 
production  of  cotton  cloth  the  cycle  has  been  traversed 
probably  some  five  or  six  times  since  1830.  The  high- 
profit  man  who  was  using  the  best  machinery  in  1830 
became  the  low-profit  man  before  1815,  and  so  on  in 
each  round  of  competition  until  the  cotton  cloth  that 
was  sold  in  1830  at  seventeen  cents  a  yard  is  now  sold 
for  about  three  or  four  cents  a  yard  or  less.  That  dif- 
ference between  seventeen  cents  and  four  cents  has  been 
given  to  the  public  in  lower  prices.  The  aggregate 
profit  in  1830  was  not  greater  than — perhaps  not  so  great 
as — in  1899,  but  the  new  machines  one  after  another 
have  created  new  margins  of  profits,  and  as  soon  as 
each  new  machine  came  into  general  use  the  profit 
disappeared  and  passed  to  the  public.  In  that  way  it 
occurs  in  all  progressive  society  that  profits  from  new 


154  TRUSTS  AND  THE   PUBLIC 

machines  are  not  permanent  but  temporary,  and  their 
duration  depends  on  the  rate  of  the  progress  of  im- 
provement. In  some  industries  the  profits  last  only  a 
few  years,  when  a  new  invention  comes  along  and 
transfers  them  to  the  public. 

On  the  wage  side,  however,  the  process  of  gain  is 
permanent.  While  increased  profits  are  temporary,  in- 
creased wages  are  everlasting.  Wages  recede  only  with 
the  collapse  of  society,  because  higher  wages  come  not 
by  the  temporary  advantage  of  a  new  instrument  but 
by  the  permanent  elevation  of  the  social  standard  of 
the  laborers.  So  that,  every  addition  to  wages — I 
mean  every  general  addition— is  a  permanent  addition 
to  the  welfare  of  the  wage  class.  Strikes,  and  even 
revolution  and  political  disruption,  will  set  in  before 
wages  can  be  permanently  pushed  back  very  far. 
Indeed,  this  republic  could  not  stand  if  by  any  process 
wages  should  be  put  back  to  the  standard  of  1830  or 
1840.  But  the  income  of  capital  can  be  pushed  back 
two  or  three  times  in  a  decade  if  new  improvements 
in  production  are  constantly  introduced.  The  capital- 
ists realize  a  part  of  this  general  trend,  and  the 
laborers  realize  another  part,  but  neither  seem  fully 
to  realize  the  general  trend  for  both. 

As  I  have  said  a  great  many  times,  the  movement  of 
advancing  wages,  lowering  prices,  and  shortening 
hours  of  labor,  is  the  movement  of  civilization.  There 
can  be  no  real  progress  without  it.  On  the  other 
hand,  it  is  equally  true  that  this  movement  in  wages 
and  prices  by  which  the  laborers  get  the  only  advan- 
tage they  ever  get,  and  the  community  gets  its  share 
of  progress,  is  impossible  unless  capitalistic  economy 
in  the  process  of  production  also  takes  place.    While 


MACHINERY  AND   LABOR  DISPLACEMENT        1 55 

it  is  true  to  a  large  extent  that  rising  wages  are  the 
cause  of  lowering  prices,  in  that  the  increased  wages 
lead  to  increased  expenditures  which  in  turn  furnish 
the  market  basis  for  the  use  of  better  methods  and 
larger  production,  yet  the  increased  wages  and  lower- 
ing  prices  cannot  come  permanently  without  being 
accompanied  by  improved  methods  of  production  in 
some  direction.  This  is  the  point  where  the  working- 
men,  and  the  public  for  that  matter,  are  confused. 

This  improvement  in  the  process  of  production 
comes  in  two  ways  ;  one  by  more  perfect  organization, 
the  other  by  more  perfect  machines.  It  is  a  peculiar 
feature  in  the  history  of  industrial  progress  that  both 
these  movements  have  always  met  with  popular  opposi- 
tion. From  time  immemorial  every  effort  to  introduce 
a  capitalistic  economy  in  production,  either  by  better 
organization  (which  means  larger  concerns)  or  better 
machinery,  has  always  been  regarded  by  the  laborers, 
and  usually  by  the  public,  as  hostile  to  popular  wel- 
fare. Even  Mill  once  went  so  far  as  to  say :  "  It  is 
doubtful  if  improved  machinery  has  lightened  the  toil 
of  a  single  laborer.''  This  feeling,  Avhich  among  the 
laborers  becomes  a  conviction,  is  so  general  that  it 
forms  a  popular  belief,  almost  universally  accepted 
and  relied  upon.  It  may  really  be  called  an  economic 
superstition. 

There  is  reason  for  this,  or  it  could  not  exist.  The 
reason  is,  of  course,  that  the  immediate  effect  of  all 
new  inventions  is  some  displacement.  For  instance, 
improved  organization — and  by  improved  of  course  I 
mean  more  economic  organization,  of  the  kind  that 
saves  waste  or  accomplishes  a  great  deal  more  with  less 
effort, — must  necessarily,  in  order  to  be  worth  while, 


156  TRUSTS   AND   THE   PUBLIC 

do  the  same  or  more  work  with  fewer  people.  The 
very  fact  that  this  occurs  involves  some  displacement. 
The  large  concerns  displace  some  of  the  smaller  shops ; 
that  is  to  say,  small  shops  which  wasted  a  great  deal 
of  energy  and  expense  in  doing  very  little,  and  con- 
sequently charged  the  public  a  higher  price. 

When  a  larger  concern  does  the  same  work  more 
efficiently  and  less  expensively,  the  small  concern  nec- 
essarily is  compelled  to  do  one  of  two  things — either 
reorganize  itself  and  become  a  part  of  a  larger  con- 
cern, or  else  leave  the  business. 

It  is  this  displacement  which  creates  the  friction. 
The  person  who  is  displaced  thinks  the  whole  world  is 
being  displaced  the  same  as  he  is.  Moreover,  he 
thinks  that  the  displacement  is  a  permanent  misfor- 
tune, seeing  onl}'  just  what  affects  himself  personally  ; 
and  he  raises  a  cry  against  the  movement  which  is 
doing  the  displacing.  The  general  idea  that  capital  is 
selfish  and  grasping  and  that  the  weak  man  is  the 
victim  lends  itself  to  the  sentiment  that  this  displace- 
ment is  working  an  injury  to  society. 

What  takes  place  with  reference  to  displacement  of 
small  concerns  takes  place  in  the  case  of  laborers  by 
the  introduction  of  new  machines.  The.  new  ma- 
chine must  displace  or  it  can  never  accomplish  any 
economy,  it  cannot  create  a  larger  profit,  it  cannot 
furnish  lower  prices,  and  it  cannot  yield  higher  wages 
or  shorter  hours.  It  is  the  very  displacement  that  is 
the  test  of  the  efficiency  or  the  degree  of  economy 
which  a  new  device  will  introduce.  Is  this  displace- 
ment permanent ;  is  it  a  permanent  evil,  or  is  it  only 
temporary?  It  is  quite  clear  that  the  workingmen 
have  always  believed — and  there  are  many  others  who 


MACHINERY   AND    LABOR   DISPLACEMENT        1 5/ 

share  this  belief — that  the  evil  is  permanent ;  that  it 
is  a  real  affliction  upon  the  laboring  class  and  con- 
sequently upon  the  community,  introtluced  by  capital 
for  its  own  selfisji  ends.  The  history  of  industrial 
advance  is  also  the  history  of  resistance  to  innova- 
tions. When  the  first  inventions  of  the  factory  sys- 
tem were  introduced,  before  the  middle  of  the  eight- 
eenth centur}^,  Crompton  and  Ilargreaves  and  Ark- 
wright  were  mobbed  by  their  fellow  hand-workers  for 
having  introduced  the  machines.  In  1779  mobs 
marched  from  town  to  town  in  England  and  broke 
the  new  machines,  and  still  later  they  did  the  same  by 
tlie  power  loom.  The  ruins  of  some  of  the  old  fac- 
tories in  which  the  power  looms  were  broken  and 
other  machinery  demolished  still  remain  in  England 
as  a  monument  to  this  opposition  to  the  first  introduc- 
tion of  steam-driven  machinery.  There  has  probably 
never  been  a  really  efficient  labor-saving  machine 
introduced  since  the  power  loom  which  has  not  met 
with  this  opposition. 

The  trade  unions,  which  are  the  great  stronghold 
and  social  weapon  of  the  laboring  class,  practically 
make  it  a  part  of  their  creed  to  oppose  the  introduc- 
tion of  new  machines.  Many  have  been  the  strikes 
against  the  introduction  of  new  machines  into  the 
workshop.  The  opposition  of  the  laborers  has  not 
been  because  they  disliked  the  new  machine  but  be- 
cause they  saw  that  it  discharged  some  laborers  and 
believed  that  it  permanently  displaced  them,  so  as  to 
increase  the  ranks  of  enforced  idleness.  They  see  the 
local  fact,  which  is  temporary,  and  they  treat  it  as  a 
general  and  permanent  fact.  They  see  the  laborer 
discharged,  and  they  do  not  see  any  power  associated 


158  TRUSTS   AND   THE    PUBLIC 

with  the  cause  which  discharged  him  that  tends  to 
furnish  him  another  job. 

It  is  not  to  be  denied  that  the  new  machine  dis- 
charges labor,  displaces  a  portion  of  the  employed 
force,  or  else  enlarges  the  production  with  the  same 
labor  force,  which  is  economically  the  same  thing. 
It  would  not  be  labor-saving  if  it  did  not  do  that. 
But  if  it  did  only  that  it  would  not  be  a  permanent 
benefit.  If  the  laborers  were  correct  in  the  belief 
that  the  introduction  of  labor-saving  machines  per- 
manently increases  enforced  idleness,  they  would  be 
entirely  right  in  regarding  new  machinery  as  detri- 
mental to  the  laborer's  interest.  But,  is  it  not  easy 
to  see  that  if  new  machines  contributed  directly  to 
the  aggregate  of  permanent  enforced  idleness  in  pro- 
portion as  they  created  economy  in  the  cost  of  pro- 
duction, the  consuming  power  of  the  community 
would  diminish  directly  as  improved  machinery  is 
used?  The  idler  cannot  buy,  and  this  would  be 
practically  a  diminution  of  the  consumption  directly 
as  it  increased  the  economy.  In  other  words,  it  would 
be  a  means  of  producing  more  but  of  directly  destroying 
the  power  to  consume.  If  this  were  true,  it  is  obvious 
that  the  market  would  begin  to  diminish  as  soon 
as  the  production  increased,  which  would  soon  de- 
stroy the  value  of  all  the  new  machines  by  intro- 
ducing an  industrial  depression  and  glutted  market. 

So  that,  the  machines  would  not  be  a  permanent  ben- 
efit; prices  could  not  be  economically  lowered,  and 
wages  could  not  rise.  None  of  our  industrial  prog- 
ress could  have  taken  place  if  improved  machinery 
meant  permanent  increase  of  idleness.  In  order  to 
make  this  point  clear,  however,  it  is  necessary  to  look 


MACHINERY   AND   LABOR   DISPLACEMENT        1 59 

at  the  concrete  facts.  General  inferences  are  too 
vague  for  the  man  who  is  discharged,  and  this  is 
becoming  more  and  more  an  important  question  in 
society.  For  example,  in  the  mercantile  world,  small 
shopkeepers  are  laboring  under  exactly  this  same 
superstition  regarding  larger  concerns,  especially  de- 
partment stores ;  in  manufacture,  the  small  manufac- 
turers are  oppressed  with  this  superstition  regarding 
large  corporations  and  trusts ;  and  in  all  the  lines  of 
progressive  industry  where  machinery  is  used  the 
laborers  are  suffering  from  the  same  misapprehension. 

At  this  time  this  subject  has  a  special  bearing  on 
the  condition  of  'New  England.  JSTew  England  was 
the  first  seat  of  the  cotton  industry  in  this  country. 
It  developed,  first,  small  water  wheels,  then  larger 
cotton  factories  with  modern  methods,  and  ultimately 
all  the  processes  to  which  I  have  referred  that  have 
lowered  the  price  of  cotton  cloth  from  seventeen  to 
three  cents  a  yard.  Now  a  migration  of  the  industry 
has  set  in,  and  the  manufacture  of  coarser  cotton 
goods  (and  ultimately  the  finer  will  follow  suit)  is 
going  South.  There  is  nothing  unnatural  in  this.  It 
is  the  migration  of  an  industry  towards  its  most 
natural  point.  Modern  cotton  manufacture  did  not 
begin  in  ISTew  England.  It  began  in  old  England,  in 
Lancashire,  the  farthest  removed  from  any  source  of 
raw  material.  It  began  in  England  because  England 
was  the  most  advanced  in  industrial  civilization.  The 
inventions  of  the  factory  system  took  place  in  Lan- 
cashire. Consequently,  cotton  manufacture  had  its 
first  half  centur}^  of  development  in  England.  It  then 
began  to  migrate  from  old  England  to  New  England. 

"With  the  political  encouragement  which   the   pro- 


l6o  TRUSTS   AND   THE   PUBLIC 

tective  tariff  gave,  still  higher  types  of  machinery  and 
forms  of  organization  were  developed  in  New  Eng- 
land. Prices  were  lowered,  wages  were  increased, 
and  hours  of  labor  shortened  ;  and,  lastly,  the  industry 
is  now  rapidly  migrating  from  New  England  to  the 
southern  states, — another  transition.  This  makes  the 
problem  a  very  very  important  one  for  the  eastern 
states.  In  the  new  mills  in  the  South,  largely  built  by 
northern  capital,  the  best  machinery  and  appointments 
are  introduced.  Wages  are  very  much  lower,  hours  of 
labor  are  very  much  longer,  and  consequently  severe 
competition  between  New  England  and  the  southern 
states  has  arisen.  Those  who  can  sell,  quality  being 
the  same,  at  the  lowest  price  will  have  the  business, 
and  the  New  England  manufacturers  found  them- 
selves with  a  higher  cost  of  production  than  in  the 
South.  They  did  as  capitalists  always  do,  tried  to 
overcome  the  dijEficulty  at  the  point  of  least  resist- 
ance,— which  was  to  lower  wages.  Temporarily  they 
succeeded  in  doing  that,  but  the  forces  of  civilization 
are  ever  constant,  and  with  the  return  of  prosperity  in 
the  nation  the  laborers'  standard  of  living  reasserted 
itself,  and  through  their  organizations  they  demand  a 
return  of  their  former  pay.  This,  a  few  weeks  ago, 
was  granted.  There  was  some  talk  among  the  em- 
ployers that  they  were  handicapped  by  the  short-hour 
legislation  of  Massachusetts  and  the  other  New  Eng- 
land states,  but  civilization  has  written  its  word  on 
that  subject.  It  is  as  impossible  permanently  to  lower 
wages  and  return  to  the  eleven  or  twelve  hour  system 
as  it  would  be  to  brush  back  the  tides  of  the  ocean. 
Progress  has  accomplished  these  things.  The  manu- 
facturers of  New  England  cannot  hold  their  compet- 


MACHINERY   AND    LABOR   DISPLACEMENT        l6l 

itive  position  by  turning  back  the  dial  of  progress. 
That  they  cannot  and  should  not  do, — better  retire 
from  business.  But  to  retire  from  business  would  be 
to  inflict  catastrophe  upon  a  great  section  of  the 
American  people.  The  sudden  collapse  of  the  cotton 
industry  in  ]^ew  England  would  be  a  calamity  to 
civilization. 

There  is  only  one  way  in  which  this  calamity  can 
be  avoided  ;  the  same  way  that  previous  readjustments 
have  been  accomplished,  by  the  introduction  of  su- 
perior methods.  The  science  and  skill  of  the  more 
advanced  civilization  must  be  the  means  of  its  defense 
against  the  new  and  less  developed.  The  South  can- 
not be  beaten  by  a  return  to  barbarism.  When  it 
comes  to  barbarism  the  South  can  win.  The  East, 
like  all  civilization,  must  protect  itself  industrially  by 
rising  to  still  higher  productive  methods. 

As  is  usually  the  case  when  all  other  methods  fail, 
capital  is  turning  to  this  mode  of  relief.  It  being  im- 
possible permanentl}''  to  reduce  wages  or  to  lengthen 
working  hours,  an  appeal  to  inventive  genius  has  been 
made  and  certain  radically  improved  machines  which 
have  been  in  process  of  development  for  several  years, 
particularly  in  the  weaving  department,  have  at  last 
been  completed.  A  new  loom,  manufactured  by  the 
Drapers,  of  Hopedale,  Mass.,  is  being  introduced.  This 
is  an  immense  labor-savino-  device  in  the  art  of  weavino-. 
The  advantage  of  it  is  that  one  weaver  can  mind  more 
than  double  the  number  of  looms  that  he  can  by  the 
old  method, — eight  looms  being  the  maximum  at 
present,  while  with  the  new  system  twenty  looms  can 
be  minded  by  a  single  weaver,  as  I  saw  a  week  ago. 

Here  the  manufacturers   are  making   a   virtue   of 
II 


l62  TRUSTS  AND   THE   PUBLIC 

necessity  and  doing  wliat  science,  progress,  and  self- 
preservation  for  themselves  and  for  the  New  England 
cotton  manufacturing  community  for  some  time  to 
come  has  made  necessary.  The  operatives,  through 
their  unions,  oppose  and  practically  refuse  to  use  the 
new  looms,  or  to  mind  more  of  the  new  looms  than 
they  did  of  the  old.  Of  course,  if  the  weaver  refuses 
to  mind  more  than  eight  looms,  then  there  is  not  a 
saving  but  a  loss  by  introducing  them,  because  they 
cost  very  much  more  than  the  old  ones.  If  the 
laborers  persist  in  this,  they  of  course  will  succeed  in 
doing  one  of  two  things,  either  stop  the  improvement 
and  therefore  prevent  the  development  of  the  only 
method  New  England  has  of  successfully  competing 
with  the  South,  thus  permanently  forcing  New  Eng- 
land into  the  position  of  a  defeated  industry,  or  else — 
what  is  even  worse — force  the  introduction  of  an  in- 
ferior population  that  will  work  for  less  wages  and 
use  the  new  looms  too. 

The  reason  assigned  for  this  oppoBition  is  that  it 
will  discharge  the  weavers,  that  it  wi)l  lead  to  displace- 
ment of  a  large  portion  of  the  operatives ; — the  samQ 
motive  that  caused  resistance  to  the  first  power  loom, 
to  the  printing  press,  the  type-setting  machine,  and  in 
fact  to  new  machinery  in  every  department  of  manu- 
facture. Of  course,  they  believe  that  this  displace, 
ment  will  be  permanent.  Although  this  oppositioi? 
has  been  presented  to  ever}^  innovation  of  the  kind 
and  has  been  shown  by  experience  to  be  erroneous,  yet 
it  still  asserts  itself. 

At  first  it  would  seem  the  height  of  stupidity,  and 
yet,  if  we  turn  to  the  employers,  who  ought  to  be 
more  intelligent,  we  find  they  act  exactly  the  same  on 


MACHINERY   AND    LABOR   DISPLACEMENT        163 

certain  subjects ;  for  instance,  the  hours  of  labor. 
From  the  time  of  the  introduction  of  the  first  law  in 
England  to  shorten  the  hours  of  labor,  in  1802,  to  the 
very  last  in  Massachusetts,  in  1894,  to  reduce  the 
hours  to  fifty-eight  a  Aveek,  the  employers  have  repeated 
without  variation,  just  as  a  parrot  calls  off  the  sound 
it  has  learned  to  make,  the  prediction  that  if  the  work- 
ing day  Avere  shortened  wages  would  be  lowered  ;  and 
yet  in  not  a  single  instance  has  that  ever  occurred. 
On  the  contrary,  either  because  of  it  or  in  spite  of  it, 
wages  have  risen  as  the  hours  of  labor  have  diminished. 
This  is  the  unbroken  record  of  nearly  a  hundred  years, 
and  yet  in  the  South,  where  they  are  asking  only  for 
a  ten-hour  law  (which  the  English  operatives  got  in 
1817)  the  professors  of  political  economy  and  the 
eloquent  portray ers  of  history  repeat  the  statement 
that  this  means  a  reduction  of  the  wages  of  the 
laborers. 

If  we  could  trace  the  history  of  every  manufactur- 
ing industry  where  machinery  is  used  it  would  be  easy 
to  see  that  in  nearly  every  case,  and  I  know  of  no  ex- 
ceptions, where  labor-saving  machinery  has  been 
introduced,  while  it  did  cause  a  displacement,  that  dis- 
placement was  always  a  re-arrangement  and  not  a 
permanent  discharge.  On  the  contrary,  with  the  re- 
arrangement there  always  has  come  a  large  increase 
in  the  number  of  laborers  employed  in  that  industry. 
Instead  of  permanently  diminishing  the  number  of 
laborers  it  has  always  increased  the  number  of  em- 
ployees in  that  industry,  and  concurrently  given  rise 
to  a  number  of  new  industries. 

Take  for  instance  the  printing  press,  as  represented 
in  the  almost  automatic  modern  Hoe  press,  by  which 


164  TRUSTS   AND   THE   PUBLIC 

nearly  all  our  great  daily  newspapers  are  now  printed  ; 
the  machine  that  takes  a  roll  of  paper  and  sends  it 
flying  through  the  rollers,  printing  it  on  both  sides, 
cutting  it  off  in  proper  lengths,  folding  it  in  sheets 
and  putting  in  the  supplements,  and  delivering  at  the 
other  end  ready  for  the  news  carrier, — a  huge  mech- 
anism that  seems  almost  to  have  human  intelligence 
and  is  more  than  human  in  its  accuracy.  This  has  so 
reduced  the  cost  of  printing  that  one  press  to-day  will 
print  more  papers  than  five  thousand  pressmen  could 
print  on  the  primitive  single  press,  and  yet,  strange  to 
say,  there  are  more  printers  than  ever  before.  Why  ? 
Because  this  press,  together  with  type-setting  ma- 
chines, has  so  reduced  the  cost  of  printing  that  the 
daily  paper  can  be  sold  for  a  penny  and  books  can 
be  sold  for  ten  cents,  giving  them  enormous  circula- 
tions. The  market  for  all  printed  matter  has  been  so 
widened  that  there  are  not  only  several  times  more 
printers  but  the  number  employed  in  the  manufacture 
of  paper,  in  binding,  and  in  the  various  tributary  in- 
dustries connected  wath  the  building  of  presses  and-  the 
equipping  of  printing  offices  has  doubled  and  trebled. 
It  has,  as  I  said,  both  increased  the  employment  for 
printers  and  created  several  new  tributary  industries 
in  which  highly  skilled  and  well-paid  labor  is  employed. 
If  we  could  go  through  manufacturing  industries  in 
general  we  would  find  a  similar  experience  in  nearly 
all  cases.  The  facts  in  the  following  table  are  taken 
from  the  United  States  Census  of  1890.  It  shows  the 
number  of  laborers  emploj^ed  in  sixty-four  industries  in 
1880  and  1890,  and  the  annual  wages  in  those  years. 
The  last  two  columns  show  the  amount  and  per  cent. 
of  increase  in  wages. 


MACHINERY   AND   LABOR   DISPLACEMENT        165 


INDUSTRY 


Boot  and  shoe  cut  stock. . . 

Boot  and  shoe  uppers 

Boots   and  shoes,   factory 

product 

Boots  and  shoes,  rubber. . . 

Boxes,  cigar 

Boxes,  fancy  and  pai>er. . . 
Boxes,  wooden  packing. . . 
Brass  castings    and    brass 

finishings 

Brassware 

Cigar  molds 

Clay  and  pottery  products 

Clothing,  inen's 

Clothing,  women's,  factory 

product 

Cordage  and  twine 

Cotton  goods 

Dentists'  materials 

Electrical    apparatus    and 

supplies 

Envelopes 

Foundry  and  machine  shop 

products 

Furniture,  including  cabi- 
net    making,     repairing 

and  upholstering 

Gas  and  lamp  fixtures . . . 
Glass  cutting,  staining  and 

ornamenting  

Gloves  and  mittens 

Gold  and  silver    reducing 

and    refining,   not    from 

the  ore , 

Hats  and  caps,  not  includ 

ing  wool  hats 

House  furnishing  goods  not 

elsewhere  specified 

Instruments,     professional 

and  scientific 

Iron  and  steel    nails    and 

spikes,  cut  and  wi-ought, 

including  wire  nails 

Iron  and    steel  pipe, 

wrought 

Iron    work,    architectural 

and  ornamental 


NUMBER 
OP  EMPLOYEES 


1880 


2,885 
437 

111,152 
4,662 
2,365 

9,678 

7,722 

6.237 

1,142 

76 

10,221 

160,813 

25,192 
5.435 

185,472 
490 

1,271 
1,204 

145,351 


52,087 
3,069 

1,586 
7,697 


304 

17,240 

592 

1,099 

2,910 
5,210 
1,934 


1890 


YEARLY 
WAGES 


5,503 

1,708 

139,333 

9,264 

5,537 

19,954 

13,922 

11,903 

7,518 

142 

20  296 

343,857 

42.008 

12,799 

221,585 

1,314 

9,485 
2,501 

247,754 


78,667 
5,530 

3,794 
8,669 


966 

37,193 

3,667 

2,371 

17,116 
12,064 
18,672 


$254 '$422 
389  525 


1880  1890 


386 
315 
316 
245 

358 

437 
360 
421 
352 
285 

264 

286 
245 

485 

537 

385 

453 


417 

478 

445 

215 


587 
384 
366 
535 

431 
343 
436 


476 
428 
385 
344 
465 

581 
539 
474 
499 
456 

447 
354 
313 

714 

565 
423 

598 


547 
649 

658 
358 


Sj  gl  W  fc  ' 


go« 


§168  66.1 

136|  34.9 

90  23.3 

113|  35.8 

691  21.8 


518 
485 
677 

456 
484 
640 


99 
107 

144 
179 
53 
147 
171 

183 

68 

68 

229 

28 
138 

145 


130 

171 

213 
143 


798  211  35.9 


40.4 
29.8 

32.9 
49.7 
12.5 
41.7 
60.0 

69.3 
23.7 

27.7 
47.2 

5.3 

48.4 

33.0 


31.1 
35.7 

47.8 
66.5 


134 
119 
142 

25 
141 
304 


34.8 
33.5 
36.5 

5.8 
41.1 
46.7 


1 66 


TRUSTS  AND   THE   PUBLIC 


INDUSTRY. 


Jewelry  and  instrument 
cases 

Jute  and  jute  goods 

Leather  goods , . . 

Leather,  patent  and 
enameled 

Lithographing  and  engrav' 

ing 

Lock  and  gunsmithing. . . . 

Mattresses  and  spring  beds 

Millinery  and  lace  goods. . 

Musical  instruments, 
pianos  and  materials. . . . 

Oil,  cottonseed  and  cake  . 

Oil,  lubricating 

Plumbing  and  gas  fitting.. 

Printing  and  publishing. . . 

Printing  materials 

Pulp,  wood 

Rubber  and  elastic  goods.. 

Shirts 

Showcases 

Silk  and  silk  goods 

Silversmithing 

Silverware 

Sporting  goods 

Stationery  goods  not  else- 
where specified 

Steam  fittings  and  heating 
apparatus 

Stereotyping  and  electro 
typing 

Tools  not  elsewhere  speci- 
fied  

Trunks  and  valises 

Type  founding 

Umbrellas  and  canes. . . . 

Watch  and  clock  materials 

Watch  cases  

Watch,  clock  and  jewelry 
repairing 

Watches   

Wirework,  including  wire 
rope  and  cable 

*  Decrease. 


NUMBER 
OF  EMPLOYEES 


1880 


138 

525 

1,036 

22 

4,322 


1890 


6,575 

3,319 

413 

9,684 

58,478 

191 

1,209 

6,268 

25,687 

692 

31,337 

131 

1,029 

1,401 

3,117 

2,474 

642 

3,151 
4,534 
1,986 
3,608 
278 
1,758 

1.657 
3,346 


1,038 
1,212 
3,074 

2,087 


10,590 
2,560 
2,3941  7,337 
6,555   11,827 


13,057 

6.301 

1,072 

42,513 

165,227 

866 

2,830 

9,802 

32,750 

1,500 

50,913 

314 

2.306 

2,199 

4,790 

11,779 

1,475 

7,095 
6,785 
2,172 
6,863 
563 
3,869 

8,647 
6,675 


YEARLY 
WAGES 


1880    1890 


270 
443 

581 

533 
415 
362 
253 

709 
265 
503 
492 
522 
517 
367 
366 
210 
475 
291 
585 
656 
293 

372 

527 

486 

472 
394 
482 
321 
309 
555 

523 
511 


4,459   7,917  383  503  120  31.3 


1566 
323 
476 

648 

674 

586 
498 
461 

715 
302 

817 
676 
635 
561 

434 
460 
326 

584 
386 
807 
701 
401 

473 

644 

724 

584 
517 
645 
466 
519 
547 

637 
552 


197 
53 
33 

67 

131 
171 

136 

208 

6 

37 

314 

184 

113 

44 

67 

94 

116 

109 

95 

222 

45 

108 

101 

117 

38 

112 
123 
163 

145 
210 


114 

41 


MACHINERY   AND    LABOR   DISPLACEMENT        167 

From  this  table  it  will  be  seen  that  in  every  indus- 
try, instead  of  the  number  of  laborers  practically 
having  diminished,  without  exception  it  has  largely 
increased,  and  this  not  by  increased  competition  and 
lowering  of  wages  but  always  with  increased  wages. 
In  other  words,  the  labor  displacement  has  not  only 
not  been  permanent,  but  the  demand  for  labor  in  each 
industry  has  been  increased  and  wages  advanced. 

Cotton  manufacture  is  no  exception  to  this  rule. 
The  table  just  cited  gives  the  comparison  only  from 
1880  to  1890,  but  if  we  either  follow  the  investigation 
farther  back,  or  bring  it  down  to  the  present,  we  find 
that  the  same  general  tendency  continues.  For  in- 
stance, in  1831  there  were  only  62,208  laborers  em- 
ployed in  cotton  manufacture  in  this  country,  and 
these  were  in  small  factories  with  old-fashioned  looms, 
without  a  weft  fork  or  stop  action  of  any  kind,  and 
the  operatives  could  only  mind  two  looms.  With  the 
improvements  of  machinery,  Tvhich  have  always  been 
displacing  laborers  or  else  doing  more  work  with  the 
same  number  of  laborers,  the  number  of  operatives  in 
that  industry,  instead  of  diminishing,  has  constantly  in- 
creased. In  1850  it  rose  to  92,286  ;  in  1860  to  122,028 ; 
in  1870  to  135,369  ;  in  1880  to  185,472 ;  in  1890  to 
221,585,  and  the  number  is  still  larger  now,  but  the 
facts  for  the  whole  country  have  not  been  recently 
collected.  During  the  process  of  this  displacement, 
from  1830  to  1880,  the  number  of  spindles  operated 
by  each  laborer  increased  nearly  three  times,  the  prod- 
uct per  spindle  increased  one-fourth,  (which  shows 
that  they  went  very  much  faster),  the  product  per 
dollar  invested  was  doubled,  the  cost  or  price  of  cot- 
ton cloth  to  the  community  was  reduced  about  sixty 


l68  TRUSTS  AND   THE   PUBLIC 

per  cent.,  the  consumption  of  cotton  cloth  by  the  com- 
munity per  capita  of  the  population  increased  over  one 
hundred  per  cent.,  and  wages  more  than  doubled. 

According  to  the  Massachusetts  Labor  Report  for 
1885  (page  187),  the  general  wages  of  mill  operatives 
in  Maine,  New  Hampshire,  Massachusetts,  Rhode 
Island  and  Connecticut  from  1831  to  1880  rose  115 
per  cent.  From  1880  to  1890  the  same  tendency  has 
continued  ;  looms  have  been  speeded,  mules  have  been 
lengthened,  ring  frames  have  been  substituted  for 
mules,  the  tendency  of  displacement  has  gone  on,  and 
yet  the  number  of  operatives  has  not  diminished,  but 
has  largely  increased,  and  wages  in  the  entire  cotton 
industry  have  risen,  according  to  the  census,  more  than 
twenty-five  per  cent 

If  we  take  the  report  of  the  most  extensive  investi- 
gation into  wages  and  prices  that  has  ever  been  made 
at  any  time  in  any  country, — the  United  States  Senate 
Report  of  1893, — similar  facts  are  revealed.  This 
report  shows  that  in  the  industry  where  the  least 
labor-displacing  machinery  was  introduced,  such  as 
agriculture,  stock  raising,  etc.,  prices  have  risen,  in 
a  number  of  instances  100  per  cent,  and  very  generally 
from  30  to  YO  per  cent. ;  while  on  the  other  hand  the 
tables  give  140  groups  of  manufactured  products  in 
the  making  of  which  labor-displacing  machinery  has 
largely  been  introduced,  and  in  all  of  these  prices  have 
fallen,  varying  from  6  to  40  per  cent.,  and  some  as 
much  as  70  per  cent.  "What  is  also  quite  marked  is 
the  fact  that  in  these  industries  where  labor-displacing 
machinery  and  organization  have  been  introduced,  not 
only  have  prices  fallen  but  the  number  of  laborers 
employed  has  increased  and  wages  have  greatly  risen. 


MACHINERY  AND   LABOR  DISPLACEMENT       169 

This  report  shows  that  the  average  wages  from  1860 
to  1891  rose  68  per  cent,  (from  1840  to  1890  wages 
rose  204  per  cent.)  and  the  pm^chasing  power  of  a 
day's  work  increased  slightly  over  Y2  per  cent.  In 
other  words,  through  this  very  labor-displacing  process, 
in  lessening  the  cost  of  production,  increasing  the 
number  of  employments,  lowering  the  price  of  the 
product,  and  increasing  wages,  the  purchasing  power 
of  labor,  which  really  represents  the  social  welfare  of 
the  laborer,  increased  24  per  cent,  every  ten  years 
from  1860  to  1890. 

The  farther  we  pursue  the  history  of  this  develop- 
ment the  clearer  it  becomes  that  the  introduction  of 
labor-displacing  machinery  does  not  tend  to  increase 
enforced  idleness,  but  on  the  contrary  it  is  a  tem- 
porary displacement  and  not  a  permanent  discharge 
of  labor  that  takes  place.  The  economic  reason  for 
this  I  have  already  explained, — the  growing  market 
for  products,  enlarging  the  demand  for  labor.  It  is, 
therefore,  the  height  of  unwisdom — in  fact  it  is  direct 
resistance  to  progress  and  social  improvement — to 
oppose  the  introduction  of  improved  machinery.  In 
the  case  of  New  England  such  action  would  be  specially 
injurious,  because  the  cotton  industry  in  'New  England 
is  in  an  exceptionally  critical  condition  by  virtue  of 
the  migratory  character  of  the  industry,  to  which  I 
have  referred.  If  the  laborers  resist  the  introduction 
of  new  looms,  they  will  stop  the  possibility  of  the  in- 
dustry in  New  England  holding  its  own  with  the 
South.  This  must  necessarily  cause  a  fiercer  struggle 
between  the  laborers  and  the  corporations,  which  will 
result  either,  as  I  have  said,  in  New  England  largely 
losing  the  business  or  the  laborers  moving  away  and 


I/O  TRUSTS  AND   THE  PUBLIC 

an  inferior  class  coming,  or  else  another  reduction  of 
wages  and  another  protracted  strike,  which  is  only 
another  way  of  destroying  the  industry  and  disrupting 
New  England  labor  conditions. 

If,  on  the  other  hand,  the  laborers  would  welcome 
the  new  machines  the  capitalists  would  save  probabl}'' 
half  the  cost  of  weaving.  The  new  looms  require  a 
larger  investment  than  the  old,  but,  if  the  laborers 
operate  sixteen  to  twenty  instead  of  from  six  to  eight, 
the  cost  of  weaving  would  be  reduced  at  least  fifty  per 
cent,  after  allowing  for  the  fact  that  a  little  more  ex- 
pensive cotton  would  have  to  be  used  with  the  new 
device.  This  would  create  a  profit  margin  for  the 
corporations,  and  they  would  naturally,  if  the  laborers 
intelligently  make  the  demand  (and  they  ought  to),  be 
willing  to  give  a  part  of  this  to  the  laborers.  A  con- 
cession that  could  easily  be  given  by  the  corporations 
would  amount  to  from  $1.00  to  $2.00  a  week  more 
than  they  can  get  with  the  present  looms,  and  with 
the  new  devices  the  working  of  the  sixteen  or  eighteen 
looms  will  be  about  as  easy  as  the  six  or  eight.  The 
result  would  be  a  net  increase  of  wages  for  the  labor- 
ers of  fully  another  ten  per  cent.  This  can  be  secured 
with  little  or  no  difficulty  if  the  new  machines  are 
used.  Moreover,  there  are  many  other  rearrange- 
ments that  can  be  made  and  would  more  readily  be 
made  if  the  operatives  would  consent  to  it,  in  the  dif- 
ferent departments  of  the  mills,  by  which  more 
machinery  could  be  minded  by  a  sub-division  of  the 
work  such  that  less  ground  had  to  be  traversed  in  doing 
the  same  thing.  If  this  also  were  permitted  without 
resistance,  something  of  a  rise  of  wages,  which  would 
simply  be  a  division  with  the  laborers  of  the  economy 


MACHINERY  AND   LABOR  DISPLACEMENT        171 

secured,  could  be  obtained  in  nearly  all  the  depart- 
ments of  the  mills. 

If  labor  organizations  mean  anything  they  mean 
uniting  the  strength  and  educating  the  intelligence  of 
the  laboring  people.  They  should  not  be  less  intelli- 
gent and  less  informed  than  the  capitalists  or  the  com- 
munity. Their  welfare  is  the  welfare  of  the  com- 
munity, the  increase  of  their  income  can  only  be  asso- 
ciated with  increase  of  productive  power  and  perma- 
nence of  industrial  success.  In  all  the  methods  that 
promote  this  end  it  is  the  interest  of  the  laborers  and 
the  community,  as  much  as  of  the  capitalists,  intelli- 
gently to  cooperate ;  but  of  course  always  cooperate 
on  the  condition  that  the  laborers  share  in  the  gain. 

Instead,  therefore,  of  opposing  the  introduction  of 
new  machines,  it  is  the  laborer's  interest  always  and 
everywhere  to  encourage  their  introduction,  but  always 
to  see  to  it  that  though  the  price  per  unit  of  work  is 
lessened  the  aggregate  amount  the  laborer  receives  for 
a  day's  work  is  increased  with  the  use  of  every  new 
device.  If  the  laborers  will  take  the  attitude  of  de- 
manding a  share  in  the  increased  product,  instead  of 
preventing  the  introduction  of  the  machines  by  which 
it  is  to  come,  they  will  not  only  promote  industrial  de- 
velopment but  greatly  accelerate  the  movement  which 
gives  them  higher  wages,  shorter  hours,  cheaper 
wealth  and  altogether  more  intelligent,  harmonious  re- 
lations with  the  community  and  the  employing  class. 

The  following  is  one  of  the  questions  asked  at  the 
close  of  this  lecture,  and  the  reply  thereto  : 

Question.  Suppose  you  were  a  member  of  one  of 
the  trade  unions  in  the  N'ew  England  factory  towns, 


1/2  TRUSTS  AND    THE   PUBLIC 

and  this  proposition  came  up  very  definitely  of  what 
action  should  be  taken  about  the  new  machines,  when  it 
was  known  that  they  would  throw  out  one-third  to  one- 
half  of  the  members  of  the  union  while  those  remain- 
ing were  to  get  more  pay.  If  you  were  one  of  those 
who  were  going  to  be  retained  at  higher  pay,  how 
could  you  vote  for  what  you  knew  was  going  to  throw 
out  half  of  the  others  entirely  ? 

Answer.  That  is  a  very  practical  question,  yet  it  is 
one  with  which  the  individual  operatives  have  to  deal. 
If  I  were  a  member  of  the  union  I  should  endeavor  to 
get  my  organization  to  control  and  modify,  as  far  as 
possible,  this  readjustment.  If  opposing  the  introduc- 
tion of  the  new  machines  would  in  any  way  be  a  bene- 
fit I  might  favor  that,  but  since  it  clearly  is  not  and  the 
improved  machinery  will  come  in  any  event,  and  if  re- 
sisted will  bring  greater  catastrophe  when  it  does 
come,  direct  opposition  is  clearly  a  futile  thing.  As  a 
member  of  the  union,  therefore,  I  would  not  advocate 
that.  Since  the  new  machines  must  be  adopted  as  the 
only  means  of  escaping  the  crushing  competition  which 
would  force  the  displacement  of  factories,  and  perhaps 
another  effort  to  reduce  wages  or  else  the  introduc- 
tion of  a  cheaper  class  of  labor  from  Canada  or 
Europe,  I  would  endeavor  to  use  the  power  of  organ- 
ization to  mitigate  the  personal  hardships  of  the  re- 
adjustments. 

The  laborers  ought  first  to  decide  that  they  will 
accept  the  new  machines,  and  then  enter  into  a 
rational  understanding  with  the  corporations  as  to  the 
amount  of  increase  of  aggregate  wages  the  new 
machines  would  yield.  Then,  all  who  were  employed 
upon  the  new  looms  should  be  expected  to  pay  a 


MACHINERY  AND   LABOR  DISPLACEMENT        173 

special  assessment  into  the  union,  constituting  perhaps 
half  or  a  certain  proportion  of  their  increase,  as  an 
out-of-work  fund  to  be  used  in  aiding  dislocated  weav- 
ers to  obtain  new  situations  in  other  places,  or  in  new 
mills  now  being  erected  either  in  Massachusetts  or 
elsewhere. 

It  must  be  remembered  that  the  introduction  of  the 
new  machines  is  not  coming  in  a  night.  Only  some  of 
the  mills  will  adopt  the  new  looms  at  first.  Many  will 
postpone  it  because  they  are  not  ready  to  make  the  in- 
creased investment,  and  so  the  transition  will  come 
somewhat  gradually ;  and  if  the  unions  would  use  a 
part  of  the  increased  wages  obtained  by  the  new 
machines  to  aid  their  fellow-members  in  relocating 
either  in  other  places  or  industries,  the  direct  hardship 
of -the  readjustment  would  be  greatly  lessened. 

Another  thing  I  should  advocate  if  I  were  a  member 
of  the  union  would  be  the  speedy  adoption  of  effective 
restriction  of  immigration,  so  that  corporations  could 
not  have  the  opportunity  of  bringing  in  new  immi- 
grants for  the  purpose  of  this  readjusting  operation, 
but  that  all  the  new  mills  which  are  erected  should  at 
least  perform  the  function  of  absorbing  the  labor  being 
displaced  in  the  transition.  I  would  also  advocate  the 
enlisting  of  trade  unions  throughout  the  country  in 
an  active  movement  for  reducing  the  hours  of  labor  in 
the  South  to  the  level  of  those  in  Massachusetts,  so 
that  the  long-hour  workday  should  not  present  a  bar- 
rier to  the  emigration  of  laborers  from  New  England 
to  the  southern  states.  In  both  these  movements  the 
operatives  might  fairly  expect  to  have  the  cooperation 
and  financial  aid  of  the  employers. 


XII. 

THE  TIN-PLATE  TRUST* 

The  manufacture  of  tin  plate  is  one  of  the  recent 
industries  which  have  been  brought  into  existence  in 
this  country  exclusively  by  a  protective  tariff.  Prior 
to  1890  there  was  not  a  pound  of  tin  plate  manufac- 
tured in  this  country.  We  imported  all  our  supply, 
free  of  duty.  Under  the  McKinley  Law  (1890)  a  duty 
of  2^  cents  a  pound  was  placed  upon  manufactured  tin 
plates.  This  immediately  had  the  effect  of  establishing 
the  industry  in  this  country,  and  we  now  produce  our 
entire  supply,  foreigners  being  unable  to  compete  with 
American  producers  in  the  American  market.  The 
product  since  July  1st,  1891,  has  been  as  follows  : 

July  1  to  December  31,  1891,     (half  year)     2,236,743 

January  1  to  December  31,  1892 42,119,192 

January  1  to  December  31,  1893 123,606,707 

January  1  to  December  31,  1894 166,343,409 

January  1  to  December  31,  1895 225,004,869 

January  1  to  December  31,  1896 369,229,796 

January  1  to  December  31,  1897 574,759,628 

January  1  to  December  31,  1898 732,290,285 


Total  product  for  7|-  years. . .  .2,235,590,629 


*  Published  in  Cfunton's  Magazine  of  May  1899. 

174 


THE  TIN-PLATE   TRUST  175 

Before  tlie  McKinley  Law  was  passed,  when  tin- 
plate  was  on  the  free  list,  it  cost  $5.10  per  box.  After 
the  industry  got  well  under  way  in  this  country  the 
price  rapidly  fell,  at  one  time  touching  $2.Y5  a  box. 
In  1894  the  Wilson  Bill  reduced  the  tariff  on  tin-plate  to 
1-^  cents.  Under  the  Dingley  Bill,  of  1897,  the  tariff  was 
raised  to  1|-  cents,  but  the  price  did  not  rise.  Indeed, 
it  has  remained  so  low  that  no  foreign  tin  can  come  in. 

In  the  fall  of  1898  the  price  in  hundred-pound  boxes 
was  $3.00  a  box.  This  price  was  regarded  as  very  low, 
yielding  very  little  profit  for  the  best  concerns  and  none 
at  all  for  poorer  ones,  and  a  loss  for  some  of  the 
poorest.  Competition  among  the  various  factories  that 
the  tariff  had  called  into  existence  was  so  severe  that 
steps  were  taken  to  reorganize  the  industry  into  a  trust, 
by  which  all  the  factories  became  parts  of  one  concern. 
Almost  immediately  after  the  trust  was  organized  the 
price  of  tin-plates  went  up  from  $3.00  to  $4.00  a  box. 
This  very  naturally  caused  consternation  among  the 
consumers  and  a  feeling  of  indignation  in  the  com- 
munity that  the  trust  Avas  using  the  power  of  its  new 
organization  to  impose  upon  the  public,  and,  instead  of 
giving  the  consumers  a  part  of  the  benefit  of  the  econ- 
omy created  by  the  larger  organization,  that  it  was 
acting  the  part  of  a  monopoly  and  charging  one-third 
more,  merely  for  its  profits. 

In  the  March  issue  of  this  magazine,  in  an  article 
"  The  Era  of  Trusts,"  attention  was  called  to  this  fact. 
It  was  suggested  that  if  the  managers  of  the  tin-plate 
trust  had  no  better  appreciation  of  the  treatment  that 
industry  had  received  at  the  hands  of  the  public  in  the 
form  of  a  protective  tariff,  upon  which  its  very  exist- 
ence depended,  than  to  use  its  organization  to  tax  the 


1/6  TRUSTS  AND   THE   PUBLIC 

community  by  monopoly  prices,  its  products  should  at 
once  be  put  upon  the  free  list ;  and,  in  fact,  that  con- 
gress should  jDass  a  law  empowering  the  secretary  of 
the  treasury  to  put  upon  the  free  list  the  products  of 
an}^  trust  that  uses  its  reorganization  to  put  up  prices. 
In  nearly  all  cases  where  legitimate  trusts  have  been 
organized  and  great  economies  accomplished,  the  man- 
agement has  had  the  good  sense  to  lower  the  price 
and  so  give  the  community  a  share  of  the  advantages 
due  to  the  superior  methods  of  organization.  Hence 
the  fact  that  the  tin-plate  trust  was  an  exception  to 
this  and  put  the  price  up  over  30  per  cent,  seemed  to 
be  an  example  of  bad  business  policy. 

Subsequent  investigation  into  the  facts  of  the  case, 
however,  shows  that  the  managers  of  the  tin-plate  in- 
dustry are  not  quite  so  unwise  as  this  rise  in  price 
would  seem  to  indicate.  Of  course,  in  passing  upon 
all  such  cases  we  should  be  careful  to  hold  the  trust 
responsible  only  for  what  it  does.  It  has  frequently 
happened  when  the  price  of  petroleum  has  tilted 
upwards  that  the  trust  has  been  condemned  as  the 
greedy  cause,  whereas  a  little  investigation  would  show 
that  it  was  due  to  a  rise  in  crude  oil.  The  same  has 
more  than  once  been  true  of  sugar. 

This  happens  to  be  true  at  least  in  part  of  tin  plate. 
It  should  be  remembered  that  the  tin  plate  manufac- 
turers, now  the  trust,  simply  buy  the  pig  tin  and  the 
steel  bars.  They  roll  the  bars  into  plates,  and  other- 
wise prepare  them,  and  put  on  the  tin  coating.  In 
other  words,  pig  tin  and  steel  bars  are  their  raw  ma- 
terials, both  of  which  they  buy.  Pig  tin  is  all  im- 
ported, duty  free,  and  steel  bars  are  largely  manu- 
factured here. 


THE   TIN-PLATE   TRUST  1 7/ 

Pig  tin  has  risen  from  12f  cents  to  25  cents  a 
pound,  or  over  96  per  cent.  The  price  of  steel  billets, 
out  of  which  the  plates  are  made,  has  risen  from 
$14.50  to  $25.00  a  ton,  or  72.4  per  cent.  Allowing 
about  5  per  cent,  for  waste  in  converting  the  billets 
into  plates,  this  is  equivalent  to  a  rise  of  $10.50  on 
1,900  pounds.  Therefore,  the  price  of  the  2^  pounds 
of  pig  tin  used  in  the  manufacture  of  100  pounds  of 
j)lates  has  risen  30.6  cents,  and  the  price  of  the  steel 
billets  used  in  100  pounds  of  tin  plate  has  risen  54.8 
cents,  making  a  rise  in  the  cost  of  the  two  elements  of 
raw  material  of  85.4  cents  per  box  of  tin  plate. 
Eefore  the  rise,  the  steel  billets  used  in  making  a  box 
of  tin  plate  cost  74.1  cents,  and  the  pig  tin  cost  31.9 
cents,  or  just  $1.06  per  box.  Therefore  the  rise  in 
raw  materials  in  a  hundred-pound  box  has  been  80 
per  cent. 

When  the  price  of  the  finished  plates  was  $3.00,  the 
remaining  $1.94  above  the  cost  of  raw  materials  was 
made  up  of  labor,  fuel  and  miscellaneous  expenses. 
The  fuel  cost  is  about  5  cents  per  box  of  tin,  and  if 
w^e  allow  an  equal  amount  for  taxes  and  insurance 
respectively,  which  is  moi'e  than  ample,  20  cents  for 
fixed  salaries — a  very  high  estimate  indeed — ,  and  9 
cents  for  depreciation  and  incidental  expenses  not 
enumerated,  the  remaining  $1.50  represents  labor 
cost, — including  the  salaries  of  clerks,  etc.  On  this 
there  has  been  a  rise  of  11  per  cent.,  or  16^  cents  per 
box.  Adding  this  to  the  85.4  cents  rise  in  the  price 
of  raw  materials  ifiakes  a  total  rise  of  $1.02  a  box  in 
the  cost  of  manufacture,  due  to  the  rise  of  wages  and 
in  the  price  of  raw  materials. 

Of  course,  the  $3.00  a  box  for  which  the  tin  plates 

12 


178  TRUSTS   AND   THE   PUBLIC 

were  sold  in  1898  did  not  all  represent  cost  of  produc- 
tion to  the  most  successful  factories.  There  were  a 
few  of  the  best  concerns  that  were  making  a  profit 
when  business  was  at  its  Avorst  and  prices  at  their 
lowest ;  but  with  the  poorer  mills,  or  those  producing 
at  the  greatest  cost,  all  of  the  $3.00  represented  cost 
of  production.  They  Avere  receiving  no  profits,  and 
some  of  them  were  working  at  a  loss.  This  is  always 
the  case  in  competitive  business,  but  it  was  especially 
the  case  during  1896,  1897  and  1898.  That  is  to  say, 
under  all  normal  competitive  conditions  those  pro- 
ducing at  the  greatest  cost  work  without  profit,  and 
their  cost  is  correctly  reflected  in  the  selling  price. 
Usually  these  producers  are  comparatively  few,  but  in 
1896,  1897  and  1898  they  were  numerous ;  some  of 
the  poorest,  as  just  observed,  being  compelled  to  work 
at  a  loss.  Since  these  dearest  producers  always  de- 
termine the  market  price  it  is  perfectly  correct  to 
estimate  the  $3.00  as  representing  the  cost  of  pro- 
ducing the  plate,  not  including  any  profit,  as  those 
whose  cost  really  determine  the  price  received  no 
profit. 

Strictly  speaking,  then,  the  rise  in  wages  and  raw 
material  in  the  manufacture  of  tin-plate  has  been 
slightly  more,  or  at  least  fully  equal  to,  the  increase 
in  the  price  since  the  trust  was  organized.  The  in- 
creased economies  of  the  trust  probably  amount  to 
more  than  this.  They  have  probably  converted  what 
was  a  loss  to  some,  no  profit  to  many,  and  a  small 
profit  to  only  a  few  into  a  more  liberal  profit  for  all, 
and  it  may  fairly  be  expected  that  the  trust  will 
share  this  undivided  profit  with  the  community  before 
long  in  a  further  reduction  of  prices.     "We  are  gl'd, 


THE   TIN-PLATE   TRUST  1 79 

however,  to  be  able  to  believe  that  whatever  increased 
profit  the  trust  is  now  making  it  is  not  getting  it  out 
of  the  rise  of  price. 

It  is  worth  noting  in  this  connection  that  the  price 
of  tin-plate,  with  the  increase  of  11  per  cent,  in 
wages,  is  still  $1.10  a  box  less  than  it  was  w^hen  we 
relied  on  foreign  supply  for  all  our  tin-plate  under 
free  importation.  What  has  really  been  accomplished 
is  this  :  the  tin-plate  industry  has  been  transferred  to 
this  country,  whatever  profits  there  are  now  go  to 
American  investors,  the  wages  expended  in  that  in- 
dustry are  distributed  to  American  laborers,  these 
wages  have  been  increased  since  the  trust  was  organ- 
ized 11  per  cent.,  the  producers  are  undoubtedly 
making  a  good  profit,  and  still  the  product  is  sold  to 
American  consumers  at  $1.10  a  box,  or  22  per  cent, 
less  than  before  the  tariff  was  adopted  and  the  trust 
organized. 


XIII. 

THE  TETHER  OF  LAEGE  FORTUNES* 

The  retirement  of  Mr.  Andrew  Carnegie  from  busi- 
ness, with  the  announcement  that  he  intends  to  devote 
the  remainder  of  his  life  to  giving  away  his  fortune  of 
$150,000,000,  has  given  rise  to  a  good  deal  of  discus- 
sion of  millionaires  and  their  fortunes.  Mr.  Carnegie 
has  some  rather  unique  characteristics.  For  a  time 
he  took  considerable  pains  to  announce  in  different 
ways  that  it  is  very  unfortunate  for  a  young  man  to 
be  born  with  a  fortune,  and  that  it  is  not  creditable 
for  a  man  to  die  rich,  because  by  so  doing  he  really 
handicaps  his  sons  or  other  relatives  to  whom  the 
fortune  passes.  Since  the  advent  of  his  little  daughter, 
however,  this  particular  phase  of  his  philosophy  of 
wealth  has  been  less  emphasized,  and  it  would  almost 
seem  as  if  the  little  girl  were  in  some  danger  of  be- 
ing terribly  handicapped. 

Tet,  as  a  part  of  that  idea  and  not  inconsistent 
with  it,  Mr.  Carnegie  is  credited  with  announcing  that 
in  retiring  from  the  cares  of  business  he  is  going  to 
devote  himself  to  becoming  a  public  benefactor,  in  giv- 
ing away  his  immense  fortune.  To  perform  this  task 
wisely  may  indeed  be  quite  as  difficult  as  it  was  to 
earn  it.     In  accumulating  a  fortune  by  successfully 

*  Published  in  Gunton's  Magazine  of  June  1899. 

180 


THE  TETHER  OF  LARGE  FORTUNES      l8l 

conducting  productive  enterprise,  a  person  is  sure  to 
benefit  the  community  in  ways  that  are  economic  and 
permanent,  because  the  helpful  influences  which  arise 
from  productive  industry  operate  silently  and  uncon- 
sciously through  the  distributive  forces  of  society. 
Millions  of  new  wealth  may  thus  be  created  and  dis- 
tributed in  wages  and  profits  and  other  forms  of  earn- 
ings which  are  sure  to  find  healthful  lodgment  through- 
out the  community.  But  when  a  single  individual 
undertakes  to  make  a  business  of  distributing  a  hundred 
or  more  millions,  there  is  danger  of  considerable  waste- 
ful misplacement.  Yet  this  step  of  Mr.  Carnegie's  has 
met  with  a  good  deal  of  approval,  and,  but  for  the 
misfortune  of  the  Homestead  affair,  which  will  prob- 
ably never  be  entirely  erased  from  his  shield,  Mr. 
Carnegie  would  receive  well-nigh  universal  applause. 

There  is  a  very  strong  feeling  abroad,  and  it  seems 
to  be  growing,  that  capitalists,  and  especially  multi-mil- 
lionaires, are  a  menace  to  public  welfare,  in  grabbing 
the  world's  wealth  to  the  impoverishment  of  the  great 
mass  of  the  community.  Hence  Mr.  Carnegie's  new 
departure — for  it  is  about  the  first  case  of  the  kind 
that  ever  occurred — is  regarded  as  an  example  to 
be  emulated. 

It  is  quite  an  open  question  whether,  if  all  million- 
aires .should  follow  Mr.  Carnegie's  example,  they  would 
really  render  better  service  to  the  public.  He  made  a 
very  sensible  remark  on  this  subject  when  he  said  the 
reason  so  few  rich  men  retire  from  business  is  that  while 
they  have  plenty  to  retire  from  they  have  little  to 
retire  to.  In  other  words,  their  lives  have  been  so 
absorbed  in  the  pursuits  of  industry,  out  of  which  their 
fortunes  have  been  made,  that  there  is  not  enough  in 


l82  TRUSTS  AND   THE   PUBLIC 

other  walks  of  life  to  attract  them,  or  even  to  make 
life  tolerable  to  them  if  they  should  leave  business 
altogether.  This  is  very  true.  The  men  of  great  busi- 
ness affairs  are  tied  to  their  business  long  after  they 
have  made  adequate  fortunes,  because  they  cannot 
leave  it.  Life  would  be  a  burden  to  them  if  they  did. 
In  short,  to  continue  in  business  is  the  only  way  for 
them  to  make  life  worth  living. 

This  brings  up  a  side  of  the  life  of  great  business 
men  and  millionaires  that  is  generally  overlooked  by 
those  who  insist  that  the  industrial  magnates  who  con- 
trol great  enterprises  are  "  gobbling  all  the  benefits  of 
civilization."  A  little  consideration  of  this  side  of  the 
problem  reveals  the  fact  that,  after  all,  even  million- 
aires can  only  really  take  unto  themselves  the  amount 
of  wealth  that  their  social  life  and  character  can  absorb. 
Yer}^  few  of  them  can  actually  absorb  more  than  $25,000 
a  year.  They  may  spend  $100,000,  but  they  give  it 
largely  to  other  people  ;  the  rest  of  the  income  from 
their  millions  goes  directly  or  indirectly  to  society. 
As  the  capitalist  cannot  use  by  his  own  social  absorp- 
tion but  a  small  portion  of  his  fortune,  the  rest  must 
be  invested  productively  or  it  is  in  danger  of  slipping 
from  him.  In  reality,  both  the  millionaire  and  his 
wealth,  outside  of  the  little  he  can  absorb  socially, 
are  devoted  in  spite  of  themselves  to  the  service  of  the 
public.  By  virtue  of  a  life  habit,  acquired  in  the 
creation  of  his  fortune,  he  has  become  tethered  to 
the  service  of  production.  lie  has  become  so  closel}'" 
tethered  to  business  that  he  does  not  even  take  on  so 
much  of  the  socializing  influence  of  civilization,  does 
not  really  absorb  so  much  of  the  progress  of  society, 
does  not,  therefore,  enjoy  so  much  of  the  mellowing 


THE  TETHER  OF  LARGE  FORTUNES      I 83 

and  sweetening  influences  of  culture,  as  many  others 
who  have  not  a  hundredth  or  a  thousandth  part  of  his 
wealth.  In  short,  there  are  even  whole  classes  who 
get  far  more  of  the  best  results  of  the  wealth  of 
modern  society  than  do  the  capitalist  millionaires 
themselves,  who  have  become  the  closely  tethered 
servants,  not  to  say  slaves,  of  productive  fortunes. 

It  may  be  said  with  some  truth  that  in  many  in- 
stances these  servants  of  fortunes  are  really  dwarfed 
on  the  best  side  of  their  nature,  and  in  not  a  few  in- 
stances have  become  indifferent  to  the  great  ethical 
and  social  movements  which  are  making;  for  a  higher 
type  of  human  life.  This  is  frequently  made  a  subject 
of  criticism.  They  are  denounced  as  mean  and  selfish, 
illiberal  and  oppressive.  But  it  is  more  correct  to  re- 
gard them  as  victims  of  an  exacting  industrial  life. 
By  their  very  superior  capacity  as  industrial  organ- 
izers, developers  of  the  world's  resources,  by  which 
wealth  is  made  cheaper  and  more  abundant  and  the 
whole  standard  of  life  raised,  they  have  become 
tethered  to  a  duty  from  which  they  cannot  escape. 
The  notion  that  millionaires  monopolize  the  enjoyment 
of  their  millions  is  wholly  unwarranted.  They  really 
get  the  benefit  only  of  a  diminishing  proportion  of  an 
increasing  product.  In  proportion  as  their  fortune  in- 
creases their  exclusive  enjoyment  of  it  becomes  rela- 
tively smaller.  Whatever  else  may  be  said,  it  is 
obvious  that  the  great  millionaire  capitalists  of  modern 
times  are  drudges  to  their  fortunes,  and  indirectly  to 
the  community. 

From  an  immediate  moral  point  of  view  it  may 
seem  to  be  a  misfortune  that  the  class  who  contribute 
most  to  the  possibility  of  civilization  should  thus  be 


l84  TRUSTS   AND   THE   PUBLIC 

dwarfed  by  the  process,  but  this  seems  to  have  been 
inevitable  under  the  circumstances.  Thus  far  it 
appears  to  have  been  an  inexorable  edict  of  evolution 
that  the  efficient  few  should  render  exceptional  service 
for  the  benefit  of  the  less  efficient  many.  In  no  other 
way  could  modern  progress  have  been  possible.  The 
application  of  science  through  the  use  of  machinery, 
which  periodically  has  involved  the  reorganization  of 
industry  into  larger  and  more  economical  concerns, 
has  necessarily  brought  with  it  more  and  more  exact- 
ing demands  upon  the  managing  captains.  This 
movement  toward  greater  productive  efficiency,  which 
every  hour  is  increasing  the  world's  wealth,  has  prac- 
tically involved  forcing  successful  capitalists  into  a 
business  groove,  which  is  the  dwarfing  process  com- 
plained of.  It  is  a  rare  exception  to  find  a  man  really 
broad,  generous,  public-spirited  and  well  rounded-out 
at  the  same  time  that  he  is  building  up  his  fortune. 
His  sons  may  be  broader,  more  liberal  and  highly  cul- 
tivated ;  the  community  is  progressing,  but  he  is  im- 
mersed in  the  responsibility  of  successfully  conducting 
an  enterprise  which  makes  this  very  broadening  prog- 
ress possible  for  others. 

The  capitalist  is  not  only  a  servant  in  the  highest 
sense  to  civilization,  but  his  very  service  so  shapes  his 
habits  and  desires  as  to  make  it  more  difficult  for  him 
to  escape  than  to  continue  the  drudgery.  It  is  very 
doubtful  if  one  per  cent,  of  capitalists  to-day  could 
retire  from  business  at  sixty-five  without  being  less 
useful  and  less  happy  than  they  would  be  by  continuing 
in  the  harness. 

Of  course,  if  industrial  progress  had  this  effect  upon 
all  the  community  it  would  be  disastrous  indeed.     It 


THE  TETHER  OF  LARGE  FORTUNES      185 

would  neutralize  its  own  benefits.  But,  fortunately, 
in  this  case  as  in  the  case  of  labor  displacement,  the 
sacrifice  of  personal  disadvantage  is  limited  to  a  few 
and  the  benefits  are  extended  to  the  many,  so  that  the 
great  mass  whose  tastes,  habits  and  life  create  the 
standard  of  civilization  and  the  environment  for  each 
individual  are  helped  by  the  process. 

It  is  true  that  this  warping  or  dwarfing  influence  is 
a  feature  almost  peculiar  to  modern  industry.  At  least, 
it  has  very  much  increased  with  the  growth  of  modern 
methods.  The  farther  back  we  go  the  more  we  find 
the  condition  where  the  employer  was  an  easy-going, 
paternal  kind  of  ma,n,  largely  a  public  character,  the 
mayor  of  the  town,  the  adviser  of  the  widow,  and  a 
sort  of  godfather  to  the  community,  and  if  we  go  still 
farther  back,  where  there  were  practicall}^  no  employers 
and  everybody  worked  for  himself,  this  element  did 
not  exist  but  barbarism  was  the  lot  of  all.  Neither 
was  there  any  dislocation  of  laborers  in  that  primitive 
simple  state.  Both  these  phases  of  seeming  sacrifice 
have  come  with  the  colossal  movement  of  progress. 
It  is  fortunate  for  society  that  this  whole  movement 
is  concentrating  the  dwarfing  responsibilities  for  the 
wealth-getting  efforts  of  the  world  to  a  smaller  and 
smaller  proportion  of  society  and  distributing  the 
results  to  an  ever  increasing  number. 

For  instance,  the  wage  and  salary  S3^stem,  which  is 
a  part  of  this  progress,  harnesses  a  constantly  increas- 
ing proportion  of  the  workers  as  simple  productive  au- 
tomatons, where  their  hours  are  prescribed,  their  wages 
fixed,  the  quality  of  their  efforts  specialized  almost  to 
the  point  of  monotony.  In  proportion  as  their  duties 
become  automatic  they  become  unexacting,  and  to  that 


1 86  TRUSTS  AND   THE  PUBLIC 

extent  the  nervous  force  and  vital  energies  of  the 
people  are  reserved  to  be  let  loose  in  the  sphere  of 
social  activities  in  which  the  gratifications  of  the  higher 
side  of  life  come.  In  the  lines  where  this  reaches  its 
highest  perfection,  the  drudgery  or  exacting  side  of 
earning  a  living  is  measured  by  the  hours  of  daily  ap- 
jDlication.  In  proportion  as  these  can  be  shortened, 
the  world  of  social  expansion  and  rounded  human  cul- 
tivation is  enlarged.  Thus,  by  this  process,  the  mil- 
lions are  being  more  and  more  relieved  from  the  bur- 
densome narrow  rut  of  life  by  being  made  irresponsible 
parts  of  the  semi-automatic  whole,  for  the  successful 
management  of  which  a  smaller  and  smaller  number, 
relatively,  become  responsible. 

Of  course,  in  the  philosophic  consideration  of  the  case 
the  question  arises,  will  this  always  be  necessary  ?  "Will 
progress  always  demand  the  sacrifice  of  the  most 
painstaking  experts  in  the  productive  life?  It  would 
seem  not.  The  tendency  of  this  movement  is  mani- 
festly to  organize,  systematize  and  centralize,  so  that 
ultimately  a  large  amount  of  automatic  momentum 
will  be  established,  and  this  will  bring  relief  even  to 
those  at  the  helm.  When  the  machinery  and  organ- 
ization in  an  industry  has  reached  approximate  per- 
fection, or  a  stage  where  great  revolutions  are  no 
longer  possible,  what  has  heretofore  required  practi- 
cal genius  to  direct  becomes  an  established  order,  each 
part  of  which  almost  takes  care  of  itself.  When  the 
presence  or  direction  of  no  given  individual  is  indis- 
pensable to  the  movement  of  the  whole,  when  the 
death  of  the  guiding  genius  would  not  disrupt  the 
working  of  the  concern  ;  when  that  ])oint  is  reached 
— and  it  has  already  been  reached  in  some  industries — 


THE  TETHER  OF  LARGE  FORTUNES      1 8/ 

the  capitalist  or  the  great  captain  of  industry  will 
become  more  perfunctory,  less  tightly  tethered  to 
duty,  and  in  common  with  the  rest  of  the  commu- 
nity may  take  on  more  of  the  broader  and  refining 
side  of  life  and  be  less  immersed  in  the  drudgery  of 
business. 

But  in  the  evolutionary  process  which  is  now  going 
on  they  are  the  drudges  of  industry.  In  a  broad  view 
of  the  subject,  therefore,  great  capitalists  in  pursuing 
a  seemingly  narrow  life,  absorbed  by  business  and 
dominated  by  margins  and  markets,  are  rendering  the 
best  service  to  society  of  which  they  are  capable,  and 
the  fact  that  they  appear  to  find  the  highest  gratifica- 
tion in  the  pursuit  of  industry  is  in  this  age  at  least  to 
the  greatest  advantage  of  civilization. 

It  is  a  misfortune  that  the  function  of  the  capitalist 
class  is  so  much  misunderstood.  It  leads  to  a  great 
deal  of  adverse  criticism  of  their  conduct,  and  tends  to 
sour  them  towards  public  interests.  They  are  made  to 
feel  that  they  are  hunted  and  censured  for  their  suc- 
cess. They  are  kept  constantly  under  the  harrow  of 
public  criticism  and  censure,  which  tends  to  make 
their  social  life  even  less  attractive  and  endurable  than 
it  otherwise  would  be,  and  here  the  capitalists  as  a 
class  help  to  intensify  this  social  antagonism  by  too 
frequently  ignoring  and  defying  public  sentiment. 
They  must  learn  that,  right  or  wrong,  the  public  is 
master  ;  that  public  opinion  is  the  opinion  that  rules 
and  will  rule  ;  and  that  it  is  a  part  of  good  economic 
investment,  a  part  of  wise  industrial  statesmanship,  to 
devote  a  part  of  the  earnings  of  their  enterprises  to  the 
education  of  the  people,  to  a  broader  and  more  philo- 
sophic understanding  of  the  capitalist's   relation   to 


1 88  TRUSTS   AND   THE   PUBLIC 

society  and  society's  relation  to  capitalistic  enter- 
prises. It  would  be  a  mistake  if  the  capitalists  should 
evolve  the  theory  that  the  true  way  is  to  ignore  the 
public  till  they  get  rich  and  then  retire  to  spend  their 
riches  for  public  purposes.  By  this  process  they 
would  succeed  in  being  disliked  as  capitalists  and 
doubted  as  philanthropists. 

The  true  function  of  a  capitalist  is  to  be  a  success- 
ful organizer  and  director  of  industry,  and  devote  a 
part  of  the  proceeds  to  movements  of  education  and 
public  improvement  as  he  goes  along.  In  that  way  his 
contributions  are  likely  to  be  good  investments,  involv- 
ing little  waste  and  producing  the  maximum  results. 
In  most  cases  it  is  safe  to  say  that  the  great  fortune 
would  do  more  good  to  be  left  in  productive  enter- 
prises than  to  be  distributed  in  great  lumps  in  any 
lines  of  philanthropj^  What  is  needed  is  that  the 
people  should  understand  the  function  of  the  capitalist, 
and  that  the  capitalist  should  understand  the  need  of 
more  liberal  public  improvements.  In  this  way  an  alto- 
gether more  harmonious  relation  between  capital  and 
the  community  would  be  evolved,  and  the  capitalist  do 
his  best  work  for  civilization,  make  his  best  contribu- 
tions to  public  improvement,  and  get  a  larger  and 
larger  personal  advantage  out  of  pursuing  an  impor- 
tant, and  what  has  hitherto  been  an  exhausting,  life  of 
business  drudgery. 


XIY. 
POWERS  AND  PERILS  OF  THE  NEW  TRUSTS  * 

Ten  or  a  dozen  years  have  now  elapsed  since  the 
trust  movement  in  this  country  began  to  assume  really 
formidable  proportions  ;  yet  the  material  conditions  of 
the  people  gradually  improve,  and  the  republic  still 
endures.  Probably  no  great  natural  movement  or 
tendency  in  the  world's  history  ever  brought  out  such 
•widespread  protests  and  dire  prophecies  of  disaster  as 
this  modern  tendency  of  capitalistic  combination.  It 
has  been  declaimed  against,  preached  against,  flayed 
in  the  press,  denounced  in  all  political  platforms,  and 
attacked  by  professors  of  political  economy  with  all 
their  resources  of  scholarly  exposition,  showing  the 
industrial  despotism  and  thraldom  of  the  masses  that 
was  sure  to  come,  and  uttering  solemn  warnings. 
"  Combinations  in  restraint  of  trade  "  have  been  out- 
lawed by  nearly  every  state  in  the  Union,  and  even  by 
national  legislation  as  far  as  it  could  be  made  to  apply 
to  the  subject.  Yet  the  trusts  march  on,  and  the 
laws  step  one  side,  because  in  not  one  case  out  of  a 
hundred  is  it  possible  to  show  that  they  are  combina- 
tions "  in  restraint  of  trade  "  ;  until,  it  is  estimated, 
about  four  billion  dollars  of  the  capital  invested  in 
productive  industry  in  this  country  has    now    come 

*  Published  in  Guntori's  Magazine  of  June  1899. 

189 


190  TRUSTS   AND   THE   PUBLIC 

under  some  form  of  trust  organization,  and  more  than 
one  and  one-half  billions  of  this  during  the  last  five 
months. 

Is  it  not  a  little  strange  that,  in  spite  of  all  this,  the 
long  promised  cataclysm  has  not  yet  arrived, — in  fact, 
seems  farther  off  than  ever?  Was  there  ever  any- 
thing so  remarkable  in  the  world's  industrial  history 
as  this  tremendous,  silent  revolution  that  has  been 
going  on  right  under  our  e3'^es,  yet  so  smoothly  and 
naturally  as  to  create  hardly  a  ripple  of  disturbance 
in  the  great  economic  round  of  daily  production  and 
consumption?  The  average  man  would  hardly  have 
had  cause  to  suspect  what  was  taking  place,  but  for 
the  deluge  of  newspaper  warnings.  True,  as  the  con- 
solidation went  on,  some  factories,  generally  the  poorer 
ones,  were  closed  down ;  but  that  had  happened  over 
and  over  again  in  the  natural  course  of  free  competi- 
tion. Again,  employees  were  discharged  in  many 
instances,  but  that  too  was  no  novelty.  It  had  alwaj^s 
occurred  whenever  a  concern  failed  or  a  plant  sus- 
pended operations  because  of  inability  to  keep  in  the 
race.  The  laborers  under  such  circumstances  have 
always  had  to  seek  employment  in  other  establish- 
ments; some  of  them,  perhaps,  remaining  in  idleness 
until  the  growth  of  business  created  new  demands  for 
labor.  Hard  as  it  is,  there  has  been  relatively  no  more 
difficulty  about  this  readjusting  process  in  recent  years 
than  formerly ;  in  fact,  at  present  the  percentage  of 
non-employment  is  very  small  indeed,  and  the  question 
is  chiefly  one  of  finding  the  right  sort  of  men  for  the 
different  kinds  of  work  to  be  done.  As  to  ruin  of 
small  competitors,  it  has  actually  been  a  great  cause 
of  complaint   against  many   recent  trusts  that  they 


POWERS   AND   PERILS    OF   THE   NEW   TRUSTS      I9I 

have  taken  in  and  saved  groups  of  old  and  poor  con- 
cerns that  would  shortly  have  gone  to  the  wall  any- 
way, making  the  productive  part  of  the  trust  carry 
the  burden  of  these  unprofitable  plants. 

Neither  in  respect  to  small  industries  nor  their  em- 
ployees, therefore,  have  the  trusts  brought  any  new 
and  unusual  hardships.  From  the  community's  stand- 
point, it  is  notable  that  during  the  past  year  the 
growth  of  trusts  and  revival  of  business  prosperity 
have  come  along  hand  in  hand.  "Whether  there  be 
any  connection  between  the  two  or  not,  it  is  clear  that 
the  one  has  in  no  way  had  the  effect  of  preventing  or 
destroying  the  other. 

This  has  become  so  conspicuous,  staring  everybody 
in  the  face,  that  public  sentiment  in  many  quarters  is 
changing  towards  the  whole  problem.  Old  standard 
newspapers,  the  very  ones  that  have  persistently  at- 
tacked the  trust  movement  for  years,  are  coming  to 
discuss  the  matter  in  a  markedly  different  spirit.  Lec- 
turers on  the  subject  need  not  now  quite  exhaust  the 
dictionary  of  vituperation  in  order  to  get  a  hearing. 
Still,  opposition  has  by  no  means  died  out.  No  poli- 
tical party  as  yet  dares  descend  to  mildness  even,  in 
its  references  to  trusts.  "  Down  with  them  !  "  is  to 
be  the  chief  rallying  cry  next  year  of  one  of  the  great 
political  parties  at  least,  and  the  other  will  meet  this 
b}^  trying  to  show  that  it  (the  party)  has  done  more  to 
stamp  out  trusts  than  has  its  opponent.  Each  party 
must  be  a  St.  George  to  some  dragon,  and  what  more 
convenient  dragon  is  at  hand  than  the  trust  ?  What 
would  a  political  speech  amount  to  without  some 
hideous  oppressor  writhing  on  the  rack,  and  the  orator 
turning  the  screw  ? 


192  TRUSTS   AND   THE   PUBLIC 

But  the  ojDposition  is  not  all  mere  "  ranting,"  by 
any  means,  Tiiere  is  a  well  defined  feeling  among  a 
large  group  of  people,  not  usually  moved  by  mere  pre- 
judice, that  we  are  rapidly  drifting  into  a  condition 
extremely  perilous  to  industrial  and  political  freedom 
and  progress,  even  though  these  results  are  not  yet 
manifest.  They  ask,  in  alarm,  whether  we  shall  not 
soon  reach  a  point  where,  all  competition  being  killed, 
the  trusts  will  throw  off  all  restraint  and  manipulate 
prices,  wages  and  legislation  precisely  to  suit  them- 
selves. They  seem  to  see  every  avenue  of  individual 
effort  closed,  especially  to  men  of  small  means,  and 
the  whole  community  reduced  to  the  status  of  wage 
earners  who  will  have  no  choice  between  serving  the 
trusts  and  facing  starvation.  They  are  possessed  of  a 
dread  that  the  outcome  of  all  this  will  beone  universal 
trust,  controlling  and  disposing  of  everything  like  a 
medieval  despotism. 

These  are  the  powers  commonly  supposed  to  lie  in 
the  hands  of  the  trusts,  or  that  will  lie  in  their  hands 
absolutely  if  the  movement  continues  much  longer. 

'Now  let  us  see  what  ground,  if  any,  there  is  for  all 
this  alarm.  Are  the  trusts  all-powerful,  or  likely  to 
become  so  ?  Before  we  can  answer  this  we  need,  first 
of  all,  to  find  the  source  of  what  power  they  do  pos- 
sess. It  is  not  in  any  arbitrary  ability  permanently 
to  raise  prices,  reduce  wages,  and  control  the  output. 
Many  foolish  attempts  have  been  made  to  do  exactly 
these  things,  and,  except  where  there  was  some  real 
economic  justification  for  the  step  taken,  they  have 
disastrously  failed.  Several  wheat  "  corners,"  the 
whisky  trust,  copper  trust,  cordage  trust,  the  nail 
and  other  attempted  combinations  in  different  branches 


POWERS   AND   PERILS   OF   THE   NEW   TRUSTS      I93 

of  the  iron  industry,  are  examples  of  what  comes  of 
economic  folly.  I^ow,  when  these  experiences  are 
contrasted  with  the  steady  and  permanent  success  of 
trusts  which  have  adopted  the  opposite  policy  of  per- 
manent economic  improvements,  reduction  of  prices, 
and  fair  dealing  with  employees,  it  furnishes  a  very 
powerful  object  lesson  to  new  trusts.  Some,  of 
course,  have  not  profited  by  it  yet,  but  they  will 
encounter  the  penalties  of  their  predecessors  unless 
they  do. 

It  is  not  surprising  that  this  should  be  so.  A  mere 
trade  agreement  between  a  group  of  concerns  does  not 
and  cannot  abolish  competition.  "  Corners  "  cannot 
succeed.  They  must  go  on  buying  up  every  new  com- 
petitor that  appears  in  the  field,  but  this  cannot  con- 
tinue very  long  without  completely  destroying  the 
profitableness  of  the  business.  It  was  this,  chiefly, 
that  brought  about  the  collapse  of  the  "  corners  "  just 
enumerated. 

The  threat  of  new  outside  competition  is  more  con- 
stant and  powerful  to-day  than  ever  before.  'No  trust 
organization  can  safely  ignore  it.  One  of  the  chief 
reasons  why  it  is  becoming  so  important  a  factor  is 
the  rapid  growth  of  our  surplus  capital.  Industry  has 
been  so  profitable  in  this  country  that  we  have  gradu- 
ally accumulated  a  great  fund  of  surplus,  and,  instead 
of  trying  to  borrow  money  abroad,  our  capitalists  are 
actually  seeking  opportunities  to  place  foreign  loans. 
Interest  rates  have  steadily  declined.  Railroad  after 
railroad  has  been  going  through  financial  reorganiza- 
tion, refunding  its  bonded  indebtedness  at  from  one  to 
three  per  cent,  lower  rates  than  were  previously  paid. 
Capital,  instead  of  being  difficult  to  obtain,  is  eagerly 
13 


194  TRUSTS   AND   THE   PUBLIC 

watching  every  opportunity  for  profitable  investment. 
This  means  that  nobody  can  have  any  absolute  control 
over  prices.  A  new  method  or  invention  in  productive 
processes,  if  obtained  by  some  actual  or  possible  rival, 
is  likely  to  undermine  a  trust  at  almost  any  time. 
Their  only  safety  lies  in  maintaining  the  lead  in  in- 
troducing every  possible  improvement  and  economy, 
and  thereby  keeping  the  price  on  a  steadily  downward 
movement  which  competitors  cannot  follow. 

A  mistaken  policy  on  the  part  of  a  vast  industrial 
concern  is  a  far  more  serious  matter  than  the  common 
daily  errors  in  the  conduct  of  a  small  business.  That 
it  is  a  very  serious  matter  to  maintain  the  constant 
supremacy  of  these  immense  concerns  is  shown  by  the 
necessity  they  are  under  of  securing  as  officers  and 
managers  men  of  the  greatest  energy  and  ability  that 
money  can  find.  Indeed,  it  is  pure  foil}''  to  imagine 
that  great  power  can  exist  without  great  responsi- 
bility, or  can  increase  without  making  discretion  and 
just  conduct  more  and  more  essential.  The  great 
rough  balance  that  exists  everywhere  in  nature  and 
keeps  it  right  side  up  and  in  stable  equilibrium  oper- 
ates also  in  economics,  and  prevents  any  permanent, 
one-sided  monopoly  of  power  and  privilege. 

The  situation  to-day  in  this  trust  matter  shows  how 
true  this  is.  We  have  been  so  impressed  by  the  enor- 
mous growth  of  the  trusts  themselves  as  almost  to 
overlook  a  fact  of  equal  importance, — that  competi- 
tion also  has  been  growing  more  and  more  keen,  even 
though  it  is  fighting  now  with  larger  weapons,  and 
not  with  a  multitude  of  staves  and  spears  as  under  the 
system  of  small  individual  industry.  The  Standard 
Oil  Company,  perhaps,  comes  as  near  being  an  indus- 


POWERS  AND   PERILS   OF  THE  NEW   TRUSTS      I95 

trial  monopoly  as  an}'^  concern  in  this  country,  yet  it 
has  either  never  cared  to  or  never  been  able  to  obtain 
control  of  some  twenty-five  or  thirty  independent  re- 
fining companies,  more  than  fifteen  of  which  have 
from  $100,000  to  $1,000,000  capital  and  are  quoted  in 
the  standard  commercial  rate  books  as  establishments 
of  good  credit.  Should  this  companj'',  through  some 
strange  freak  of  management,  reverse  its  established 
policy  and  try  to  restore  the  oil  prices  of  several 
years  ago,  there  is  no  doubt  but  that  capital  would  be 
put  into  many  of  these  outside  plants,  and  into  new 
oil  fields,  and  powerful  competing  industries  built  up. 
The  Standard  maintains  its  position  only  by  keeping 
prices  at  a  point  so  low  that  only  a  few  well  situated 
outsiders  can  compete. 

The  sugar  trust  for  several  years  after  its  formation 
had  practically  no  competition.  Now,  however,  for  a 
year  or  more  a  fierce  fight  has  been  in  progress  be- 
tween the  sugar  trust  and  tlie  Arbuckles,  which  seems 
no  nearer  conclusion  than  ever.  But,  it  is  stated  on 
quite  definite  official  authorit}^,  that  if  at  any  time 
these  competitors  should  combine  there  are  at  least 
two  new  syndicates  ready  and  waiting  to  enter  the 
field,  one  operating  in  Maryland  and  the  other  in 
]^ew  York.  It  is  even  more  difficult  to  monopolize 
this  business  than  the  refining  of  petroleum.  The 
one  fact  of  the  rapid  growth  of  free  capital  seeking 
investment  is  a  force,  tending  to  keep  all  such  indus- 
tries at  the  point  of  greatest  efficiency  and  lowest 
prices,  infinitely  more  powerful  than  all  the  legislation 
that  could  be  devised  for  that  purpose. 

Much  the  same  situation  is  developing  in  the  case 
of  paper  manufacture.     About  seventy -five  or  eighty 


196  TRUSTS  AND   THE  PUBLIC 

per  cent,  of  the  producing  capacity  of  the  country  was 
brought  into  the  recently  organized  paper  trust,  but 
there  is  already  vigorous  competition  outside,  and 
prospect  of  rapid  growth  of  new  independent  con- 
cerns. The  Neio  Yorh  Journal  of  Commerce  and  Com- 
mercial Bulletin^  a  pronounced  anti-trust  paper,  is 
authority  for  this  information.  According  to  the 
Shoe  and  Leather  Reporter  precisely  the  same  condi- 
tion exists  with  reference  to  the  leather  and  rubber 
goods  trusts.  "  There  are  a  number  of  outside  com- 
panies," it  says,  "  who  are  holding  their  own  and 
maintaining  a  high  standing  in  the  trade." 

Even  in  lines  of  business  that  seem  to  be  in  their 
nature  as  nearly  monopolistic  as  it  is  possible  to  be, 
there  has  recently  been  an  unprecedented  amount  of 
competition.  The  severe  fight  among  the  gas  com- 
panies in  Kew  York  city  has  brought  about  a  reduc- 
tion, by  some  of  the  companies,  to  65  cents  per  thou- 
sand feet,  and  by  others  to  50  cents,  while  the  uniform 
price  before  was  $1.10.  It  is  not  probable  that  this 
state  of  affairs  will  continue  long,  because  the  price 
quoted  is  probably  just  about  at  the  cost  point  of  pro- 
duction. A  consolidation  may  be  effected  and  a 
somewhat  higher  uniform  rate  established,  but  it  is 
safe  to  predict  that  never  again  will  the  former  price 
be  reached.  If  it  gets  above  85  or  90  cents,  there  is 
really  nothing  to  prevent  the  entrance  of  still  other 
competitors,  as  in  the  present  case,  anxious  to  share 
the  profits  at  that  rate.  This  has  not  been  confined 
to  New  York.  Other  cities  have  recently  secured 
considerable  reduction  in  gas  rates,  and  still  others 
are  considering  propositions  from  competing  com- 
panies to  furnish  gas  much  cheaper  than  at  present. 


POWERS  AND   PERILS   OF  THE   NEW   TRUSTS      I97 

This  is  also  true  in  the  case  of  street  railway  trans- 
portation. The  steady  tendency  is  to  give  us  better 
cars,  faster  time,  and  cheaper  service  through  the 
increased  mileage  covered  by  a  five-cent  fare,  and  ex- 
tension of  transfer  arrangements.  In  New  York  this 
movement  has  been  so  extensive  lately  that  the  sub- 
urban movement  is  really  taking  on  enormous  propor- 
tions. Competition  between  the  elevated  and  surface 
lires,  added  to  the  pressure  of  the  public  demand,  has, 
within  the  last  few  months,  produced  most  important 
results.  The  elevated  railway  is  to  change  its  motive 
power  to  electricit}^,  equip  its  line  with  new  cars  and 
establish  express  train  service.  The  Metropolitan  is 
continually  extending  the  area  of  transfers,  and  now 
the  Third  Avenue  road  has  arranged  a  transfer  system 
with  the  Manhattan  Elevated,  and  also  with  the 
Union  trolley  lines  in  the  Bronx  Borough,  so  that  it 
is  possible  to  go  from  the  City  Hall  to  New  Rochelle 
on  Long  Island  Sound  for  eight  cents.  In  Brooklj^n, 
which  is  the  competitor  of  New  Jersey  and  West- 
chester County  for  suburban  business,  a  recent  re- 
organization has  already  given  more  rapid  and  cheaper 
long  distance  service,  and  very  soon  the  old  engines 
and  trains  of  the  elevated  roads  are  to  be  replaced  by 
electric  cars  running  on  express  train  schedules. 

If,  therefore,  competition  does  remain  in  active  op- 
eration in  some  form  or  other,  even  in  such  cases  as 
these,  is  it  not  an  idle  fear  that  it  can  ever  be  abol- 
ished in  all  the  open  and  not  naturally  monopolistic 
industries  ?  There  is  no  reason  whatever  to  suppose 
that  the  whole  field  can  ever  be  monopolized  in  any 
line  of  industry.  It  may  be  comparatively  easy  to 
combine  half  or  three-fourths  of  the  large  establish- 


198  TRUSTS  AND  THE  PUBLIC 

ments  in  an  industry,  but.  it  is  immensely  difficult  to 
get  a  much,  larger  proportion.  The  difficulty  doubles 
and  trebles  with  every  new  step  toward  the  hundred 
per  cent,  mark,  until  further  effort  becomes  altogether 
more  costly  than  it  is  worth.  It  is  like  the  old  catch- 
problem  of  finding  how  long  it  would  take  to  reach 
the  end  of  a  road  by  traveling  half  the  remaining  dis- 
tance every  hour.  Progress  at  first  is  rapid,  but  ob- 
viously it  is  impossible  ever  to  reach  the  end. 

But,  even  if  the  amount  of  actual  competition  is  re- 
duced to  very  narrow  limits,  the  possibility  of  new 
competition  always  exists ;  and,  as  we  have  pointed 
out,  its  probability  increases  with  every  increase  in  the 
surplus  capital  of  the  community.  This  is  potential 
competition,  and  as  industry  becomes  organized  on  a 
large  and  finely  balanced  scale  it  is  not  one  whit  less 
effective  than  the  actual.  Another  important  point  is 
this  : — potential  competition,  especially  with  respect  to 
small  employers  and  wage  earners,  is  far  more  merciful 
and  humane  than  when  the  warfare  is  actually  on. 
"We  are  forever  hearing  competition  exalted  and  "glo- 
rified almost  as  a  sacred  institution,  of  inestimable 
benefit  to  the  entire  community,  but  as  a  matter  of 
plain,  hard  experience,  it  is  only  a  part  of  the  results 
of  competition  that  is  really  beneficial.  Its  actual 
working,  as  between  a  multitude  of  small  rivals,  is 
attended  with  all  manner  of  heartlessness  and  immo- 
rality, failure  of  employers  and  discharge  of  employees. 
The  trust  movement  is  tending  to  abolish  these  painful 
features  by  gathering  the  bulk  of  the  concerns  in 
various  industries  into  large  and  permanent  organ- 
izations. As  these  become  thoroughly  unified,  the 
plants  they  control  will  have  to  keep  in  operation  some 


POWERS  AND   PERILS   OF  THE   NEW   TRUSTS      1 99 

way  or  other,  like  railroads,  however  the  management 
may  change.  At  the  same  time,  by  the  force  of  po- 
tential competition,  the  eagerness  of  idle  capital,  and 
the  threat  of  new  inventions  in  the  hands  of  outside 
parties,  we  shall  get  the  benefit  of  cheaper  commodities 
the  same  as  if  the  competitive  struggle  and  slaughter 
were  actually  going  on.  The  present  movement  in 
both  these  directions  is  tending,  at  least,  to  give  us  an 
industrial  system  as  nearly  ideal  as  seems  within  the 
range  of  economic  possibility. 

The  wage  earner  will  not  be  injured.  Alongside 
the  organization  of  capital  comes  organization  of  labor, 
and  this  means  more  and  more  that  industrial  peace  is 
absolutely  necessary  to  the  success  of  large  concerns. 
As  we  have  pointed  out  in  another  connection,  the 
larger  they  become  the  greater  the  necessit}^  of  smooth 
operation  and  the  more  disastrous  is  interruption  or 
strife.  A  prolonged  strike  or  shut-down  would  be  al- 
most ruinous  to  very  large  concerns,  while  giving  com- 
petitors a  free  hand  in  building  up  a  rival  business. 
This  fact  makes  it  more  and  more  important  to  grant 
the  reasonable  demands  of  labor.  Trade  union  or- 
ganization in  the  hands  of  the  laborers  is  a  more  ef- 
fective weapon  against  large  concerns  even  than  against 
small  ones,  because  the  penalty  they  can  inflict  is  im- 
measurably greater.  Many  large  concerns  appreciate 
this  so  keenly  as  to  forestall  trouble  by  voluntarily 
granting  wage  increases.  This  has  been  very  con- 
spicuous, lately,  in  the  case  of  the  steel,  tin-plate  and 
leather  goods  trusts. 

Nor  is  the  man  of  small  capital  to  be  crushed.  He 
cannot,  it  is  true,  engage  with  much  chance  of  success 
in  many  of  the  old  established  lines  of  manufacturing 


200  TRUSTS  AND   THE   PUBLIC 

industry,  but  this  by  no  means  implies  that  be  has  no 
opportunity  for  individual  investment.  On  the  con- 
trary, the  very  growth  of  corporations  and  trusts  opens 
a  broader  field  for  a  small  investor  than  ever  before. 
Perhaps  he  cannot  start  a  plant  of  his  own,  but  he  can 
buy  stock,  however  small  the  amount,  in  any  one  of 
hundreds  or  thousands  of  different  enterprises  and  share 
in  its  management.  These  opportunities  constantly  in- 
crease. It  is  now  possible  for  men  of  experience  and 
peculiar  skill  in  any  special  direction  to  gather  to- 
gether the  large  or  small  accumulations  of  hundreds  of 
other  people  and  carry  on  an  industry  that  is  much 
more  likely  to  be  profitable  to  them  all  than  if  each 
man  tried  to  start  a  small  business  of  his  own.  If  a 
man  happens  to  be  a  poor  manager,  the  fact  of  owning 
his  own  little  establishment  is  of  no  use  or  advantage 
to  him.  It  is  much  better  to  succeed  as  a  joint  owner, 
employing  trained  and  skilled  management,  than  to 
fail  as  the  incompetent  sole  proprietor  of  one's  own 
business. 

The  fear  that  the  trusts  will  finally  control  all  legis- 
lation is  equally  groundless.  At  first,  a  decade  or  so 
ago,  large  corporations  undoubtedly  did  exert  a  power- 
ful influence  in  controlling  legislation  in  certain  di- 
rections, but  the  very  fact  that  this  was  done  in  a  few 
instances  caused  so  great  a  reaction  in  public  sentiment 
that  the  whole  tendency  has  been  to  the  opposite  ex- 
treme ever  since.  To-day  legislatures  vie  with  each 
other  in  passing  measures  restricting  the  powers  of 
corporations  or  increasing  their  taxation,  while  it  is 
almost  impossible  for  these  concerns  to  get  any  legis- 
lation definitely  in  their  favor.  It  is  only  necessary  to 
look  over  the  statute  books  throughout  the  country  for 


POWERS   AND   PERILS   OF   THE   NEW   TRUSTS      201 

the  last  few  years  to  verify  this.  Every  year  sees  in- 
creased anxiet}^  on  the  part  of  legislators  to  make  a 
record  for  anti-capitalist  activity.  There  is  not  the 
least  reason  to  suppose  that  this  tendency  will  di- 
minish. To  just  the  extent  that  trusts  fail  to  justify 
themselves  to  the  public,  or  attempt  unscrupulous 
methods  either  in  business  or  in  legislation,  political 
hostility  to  them  will  continue. 

Finally,  we  come  to  face  this  bugbear  of  a  great 
universal  trust  which  is  to  absorb  everything  and  rule 
us  by  its  own  sweet  will.  Here  again  a  very  simple 
test  reveals  all  the  reasonable  probabilities.  Just  as  in 
the  case  of  the  permanence  and  stability  of  separate 
trusts,  the  limit  to  size  and  extension  will  be  fixed  by 
the  test  of  greatest  productive  econom}^.  If  it  is  found 
that  several  different  kinds  of  industries  can  be  con- 
ducted jointly  more  economically,  and  hence  more 
profitably  to  the  owners  and  with  lower  prices  to  the 
public,  consolidation  will  go  on  to  that  point,  but  no 
farther.  If  a  combination  is  formed,  in  which  the 
effort  to  handle  two  or  more  different  kinds  of  indus- 
tries under  a  single  management  proves  more  wasteful 
and  awkward  than  the  old  plan,  it  will  break  down. 
New  competition  will  be  invited  into  the  field,  and 
former  conditions  will  return.  As  productive  methods 
become  more  and  more  highly  specialized,  and  expert 
management  more  and  more  a  real  science  in  each  dif- 
ferent field,  separation  of  very  unlike  industries  be- 
comes even  more  necessary  to  good  results  than  for- 
merl}^  An  expert  in  the  sugar  refining  business,  for 
instance,  if  placed  also  in  charge  of  piano  making  or 
cotton  manufacturing,  would  probabl}^  hamper  both 
those  industries  and  perhaps  before  long  render  them 


202  TRUSTS  AND   THE  PUBLIC 

unprofitable  by  his  bungling  interference.  It  is  nearly- 
impossible  for  one  mind  to  be  supremely  expert  in 
three  or  four  different  fields,  and  this  simple  limitation 
of  human  capacity  prohibits  the  universal  trust. 

ISTot  even  if  the  actual  running  of  each  business  were 
left  to  special  experts,  and  only  the  general  business 
policy  put  in  the  hands  of  a  joint  committee,  would 
success  always  come.  Different  industries  require  dif- 
ferent general  business  policies  quite  as  much  as  dif- 
ferent factory  management.  It  would  be  hard  to 
imagine  a  more  inviting  field  for  competitors  than  one 
in  which,  for  instance,  a  miscellaneous  collection  of 
industries  such  as  oil  refining,  cloth  manufacturing, 
wheat  growing,  stock  raising,  railroad  managing  and 
store-keeping  were  in  operation  under  the  joint  di- 
rection of  one  committee  of  managers,  each  with  a  dif- 
ferent  idea  of  business  methods.  Such  a  combination 
would  be  so  grotesquely  unnatural,  cumbersome  and 
inefficient  that  it  probably  could  not  last  six  months. 
It  would  be  a  more  easy  victim  to  innumerable  outside 
assaults  in  specific  lines  than  even  the  sleeping  Gulliver 
to  the  Lilliputians. 

Indeed,  it  is  not  altogether  unlikely  that  after  a  few 
years  there  may  be  a  dividing  up  even  of  some  of  the 
trusts  already  organized.  Senator  Depew,  whose  op- 
portunities for  insight  into  general  industrial  condi- 
tions are  perhaps  as  broad  as  those  of  any  man  in  the 
country,  takes  this  view  very  strongly  indeed,  and 
even  believes  that  we  shall  finally  return  to  the  condi- 
tions of  a  decade  or  more  ago.  This  does  not  seem 
very  probable,  except  in  the  case  of  useless  and  un- 
wieldy combinations;  but  it  would  undoubtedly  be 
true  of  any  attempt  to  unite  a  large  number  of  wholly 


POWERS   AND    PERILS   OF  THE   NEW   TRUSTS      203 

different  kinds  of  industries  under  one  management. 
Tlie  grouping  of  each  industry  by  itself  seems  to  be 
the  natural  point  of  greatest  economic  efficiency ;  but 
if,  in  time,  a  real  advantage  is  found  in  still  wider  com- 
bination along  certain  lines,  that  will  come.  These 
larger  trusts,  however,  would  be  subject  to  exactly  the 
same  perils  as  we  have  shown  exist  at  present.  The 
difficulty  and  danger  of  moving  counter  to  public  wel- 
fare increase  as  the  trust  grows  and  exposes  fresh 
points  of  attack.  The  only  protection  to  economic 
vulnerableness  is  economic  wisdom. 

While  the  general  trend  of  this  whole  movement 
affords  no  ground  for  sensational  alarms  as  to  its  con- 
sequences, present  or  future,  there  are  likely  to  be 
many  serious  disturbances  in  its  progress,  due  to  the 
ignorance  or  selfishness  of  individuals  connected  with 
it.  This  is  and  will  be  true  wherever  a  speculative 
"  corner  "  is  organized  to  force  up  prices  ;  or  wherever 
a  set  of  irresponsible  brokers  organize  a  highly  over- 
capitalized trust  and  sell  out  their  holdings,  leaving  the 
concern  to  flounder  around  as  best  it  may,  and  perhaps 
fail  for  want  of  any  real  economic  welding  force 
within  it.  This  is  true,  too,  wherever  either  corpora- 
tions or  trusts  try  to  interfere  with  the  legitimate 
organization  of  labor  or  to  reduce  wages  and  exact 
longer  hours  of  labor. 

The  great  duty  of  the  hour  is  to  discriminate  be- 
tween the  movement  itself  and  the  follies  of  individual 
bunglers.  Most  of  the  latter — "  corners  "  for  instance 
— bring  their  own  economic  penalties  more  promptly 
than  any  legislative  ones  that  could  be  applied.  In 
the  case  of  stock  watering,  if  the  increased  capital 
does  not  really  represent  a   corresponding    earning 


204  TRUSTS  AND   THE  PUBLIC 

capacity,  failure  is  certain.  A  few  more  experiences 
of  this  ought  to  be  enough  to  prevent  either  the  own- 
ers of  industries  from  transferring  their  plants  or 
owners  of  capital  from  loaning  their  money  in  aid  of  un- 
sound reorganizations.  Where  capital  interferes  with, 
the  right  of  labor  to  organize,  the  law  might  properly 
step  in  and  provide  severe  penalties  for  any  attempt  to 
black-list  or  intimidate  wage  earners,  or  break  up  their 
organizations,  or  require  them  to  forswear  trade  union 
membership  as  a  condition  to  employment.  The  duty 
of  the  public  lies  in  watching  these  points,  not  in  pas- 
sionately opposing  this  great  economic  movement  of 
society,  which,  as  it  gradually  rids  itself  of  error  and 
attains  its  full  possibilities,  will  give  us  permanent  in- 
dustrial efficiency  and  security.  At  the  same  time, 
the  trusts  must  learn  that  after  all  the  public,  as  con- 
sumer, competitor  and  lawmaker,  is  the  real  and  final 
master  of  the  situation.  Whenever  the  people  cease  to 
share,  and  share  liberally,  in  the  benefits  of  this  move- 
ment, its  end  is  come. 


XV. 

THE  TAKIFF  AND  TRUSTS* 

The  latest  outbreak  on  the  subject  of  the  protective 
tariff  and  its  relation  to  trusts  was  caused  bj  Mr,  H. 
O.  Havemeyer's  testimony  given  before  the  Industrial 
Commission  on  June  14th.  Almost  in  the  opening 
sentences  of  his  carefully  prepared  and  typewritten 
testimony  he  declared  that :  "  The  mother  of  all  trusts 
is  the  customs  tariff  bill."  This  gave  a  new  text  to 
the  anti-trust,  and  particularly  the  anti-tariff,  preach- 
ers throughout  the  country.  For  political  purposes, 
the  anti-trust  issue  was  in  a  rather  unsafe  condition. 
To  be  sure,  Mr.  Bryan  was  proclaiming  loud  and  long 
against  trusts.  He  and  his  friends  decided  to  make 
this  a  prominent  if  not  the  conspicuous  issue  of  the 
coming  presidential  campaign.  But  he  has  insisted  on 
coupling  with  it  the  free  coinage  of  silver  at  16  to  1, 
which  is  economic  dynamite  to  the  conservative  men 
throughout  the  country. 

So  that,  in  reality,  every  fresh  boom  for  the  anti- 
trust movement  was  a  lift  for  free  silver.  Free  traders, 
who  generally  favor  sound  money  and  even  declare 
for  the  gold  standard,  would  rather  have  trusts  than 
take  Bryan  with  IG  to  1.  Consequently,  some  of  the 
ablest  among  free  trade  journals  have  defended  the 

*  Published  in  Gunton's  Magazine  of  August  1899. 

205 


206  TRUSTS  AND   THE   PUBLIC 

present  administration,  justified  its  foreign  policy,  and 
occasionally  given  a  quasi- justification  for  large  cor- 
porations, all  because  they  are  afraid  of  carrying  grist 
to  the  Bryan  mill.  But  Mr.  Havemeyer  came  to  their 
relief,  in  his  testimony  before  the  Industrial  Commis- 
sion, with  the  declaration  that :  "  The  mother  of  all 
trusts  is  the  customs  tariff  bill."  This  statement  has 
been  hailed  as  the  word  of  a  political  deliverer.  It 
has  been  caught  up  and  repeated,  made  the  subject  of 
acres  of  editorials,  and  hundreds  if  not  thousands  of 
cartoons,  as  if  it  were  the  last  word  upon  the  subject. 

The  usually  dignified  journals,  which  ordinarily  dis- 
play self-possession  and  intelligence  in  discussing  pub- 
lic questions,  have  fallen  at  the  feet  3f  Mr.  Havemeyer 
as  a  new  prophet  of  economics.  That  the  yellow 
journals,  16-to-l  advocates,  populists  and  socialists, 
should  make  much  of  his  utterance  is  not  surprising, 
since  they  feed  chiefly  on  the  foam  of  sensation  ;  but 
to  find  the  sober  papers  and  magazines  vying  with  the 
gutter  journals  in  this  substitution  of  sensation  for 
rational  discussion  indicates  that  the  stream  of  public 
opinion  is  being  polluted  at  its  very  source. 

All  this  tends  to  show  a  dishonesty  of  utterance  on 
public  questions.  The  talk  against  great  wealth  by 
millionaire  journalists  like  Bennett,  Hearst  and  Pulit- 
zer, capitalists  like  Havemeyer,  and  millionaire  poli- 
ticians like  Alger  and  Pingree,  of  course  is  not  to  be 
taken  seriously.  They  are  performing  to  the  galleries, 
they  are  catering  to  a  public  sentiment  that  has  been 
created  by  systematic  traducing  of  successful  business 
men  for  political  purposes.  This  is  so  general  that 
frank,  honest  discussion  of  the  public  aspects  of  in- 
dustry has  become  diflS.cult  and  in  many  quarters  im- 


THE  TARIFF  AND   TRUSTS  20/ 

possible.  Intellectual  integrity  in  this  field  of  public 
interests  is  rapidly  being  submerged  and  superseded 
by  economic  cant  and  public  sensation.  The  extent 
to  which  this  is  taking  place  is  painfully  illustrated  by 
the  way  in  which  the  Havemeyer  testimony  is 
heralded  and  extolled  by  the  press  throughout  the 
country. 

From  the  homage  paid  him  immediately  after  his 
testimony  before  the  Industrial  Commission,  one 
might  think  that  he  was  a  statesman  or  economist 
whose  opinions  on  important  public  questions  should 
have  great  weight.  Yet,  really,  he  had  never  been 
suspected  of  anything  of  the  kind.  He  has  never  said 
or  done  an3"thing  to  entitle  his  opinion  on  matters  of 
public  concern  to  any  special  weight  whatever.  Mr. 
Havemeyer  is  known  only  as  the  president  of  the  so- 
called  "sugar  trust,"  whose  reputation  is  the  most 
unsavory  of  any  large  industrial  concern  in  this 
country.  His  trust  has  been  notorious  as  a  stock 
manipulator.  It  plays  ducks  and  drakes  with  its  own 
stock  in  the  market  place,  making  large  profits  out 
of  unsuspecting  investors.  Under  Mr.  Havemeyer's 
leadership  the  sugar  trust  has  been  the  most  conspicu- 
ous as  a  manipulator  of  congress  by  doubtful  methods. 
As  recently  as  1894,  when  the  Wilson  bill  was  before 
the  United  States  senate,  his  trust  was  the  most  active 
factor  in  the  lobby.  He  then  believed  that  a  high 
tariff  was  a  very  good  thing,  and  labored  long  and 
hard  to  secure  it  for  sugar.  Indeed,  his  activity  for 
high  protection  to  sugar  created  a  national  scandal. 
Bold  corruption  and  bribery  were  openly  charged  in 
the  senate,  and  a  committee  was  appointed  to  investi- 
gate the  matter.    At  the  hearing  before  this  commit- 


208  TRUSTS   AND   THE   PUBLIC 

tee  certain  of  Mr.  Havemeyer's  witnesses,  conspicuous 
employees  of  the  trust,  were  sent  to  jail  for  refusing 
to  answer  questions,  which  it  was  feared  would  have 
placed  upon  the  sugar  trust  the  crime  of  corrupting 
the  United  States  senate,  ^Nothing  more  scandalous 
has  occurred  in  the  public  affairs  of  the  republic. 

At  that  time  the  free  trade  journals  in  the  land 
furiously  denounced  Mr.  Havemeyer  as  a  low,  selfish 
monopolist,  a  corrupter  of  legislators  and  a  debaucher 
of  public  morals.  His  opinion  on  the  tariff  or  any 
other  public  question  was  then  regarded  by  the  press 
as  of  no  more  account  than  the  brawlings  of  a  cheap 
politician  or  a  cunning  monopolist.  Nothing  has  oc- 
curred since  to  indicate  that  Mr.  Havemeyer  is  either 
more  intelligent,  more  public-spirited  or  more  honest 
now  than  he  was  in  1894.  But  now,  when  he  appears 
before  the  Industrial  Commission  and  declares  that 
the  tariff  is  the  "  mother  of  all  trusts,"  his  utterance 
is  hailed  as  from  one  who  speaks  ex  cathedra.  If  he 
believes  that  trusts  are  really  a  bad  thing,  then  he  is  a 
disreputable  man  for  being  at  the  head  of  one.  If  he 
does  not  believe  that,  then  he  is  a  humbug  for  saying 
what  he  did.  If  trusts  are  legitimate  and  proper  con- 
cerns, as  he  afterwards  endeavored  to  show,  then  it 
would  be  nothing  against  the  tariff  if  it  were  the 
mother  of  them  all.  It  is  a  public  benefit  to  be  the 
mother  of  a  good  thing.  The  fact  of  the  matter  is 
that  Mr.  Havemeyer  is  neither  honest  enough,  nor 
economist  enough,  nor  public-spirited  enough  either 
to  know  or  care  whether  trusts  are  good  or  bad,  or 
whether  they  are  helped  or  hindered  by  tariffs.  His 
talk  was  illogical  and  contradictory  and  very  clearly  a 
case  of  "  sour  grapes "  whining.     Whatever  may  be 


THE   TARIFF   AND   TRUSTS  209 

the  public  interest  in  the  case,  Mr.  Havemeyer's  state- 
ment on  the  subject  is  utterly  worthless,  both  from 
the  moral  and  economic  point  of  view.  The  only 
thing  of  significance  in  the  Havemeyer  situation  is  the 
fact  that  the  press,  after  having  treated  him  as  a 
conscienceless  corruptionist,  should  pretend  to  attach 
any  importance  to  this  obviously  soured  utterance. 
This  fact  is  alike  discreditable  to  the  press  and  danger- 
ous to  the  public  sentiment  of  the  nation. 

But  how  much  truth  is  there  in  Mr.  Havemeyer's 
charge  that :  "  The  mother  of  all  trusts  is  the  customs 
tariff  bill  ? "  This  is  not  a  matter  of  opinion,  but  a 
question  of  fact,  and  it  is  the  one  statement  in  his  ad- 
dress which  is  most  heralded  throughout  the  country. 
If  Mr.  Havemeyer  is  half  as  well  informed  on  this 
point  as  those  who  are  repeating  his  statement  would 
have  us  believe,  he  knows  that  more  than  90  per  cent, 
of  this  statement  is  false.  In  the  first  place,  there  are 
practically  no  trusts  in  the  country.  Mr.  Havemeyer 
knows  that  the  American  Sugar  Refining  Company,  of 
which  he  is  president,  is  not  a  trust.  As  a  trust  it  was 
disorganized  by  law,  and  it  is  now  simply  a  large  corpo- 
ration. The  Standard  Oil  trust  was  the  first,  the 
largest  and  about  the  last  trust,  since  it  is  just  now 
about  to  be  reorganized  into  a  single  corporation,  just 
like  any  cotton  or  woolen  or  publishing  corporation. 

The  tin-plate  trust  is  due  to  the  tariff  only  because 
the  existence  of  the  industry  itself  is  due  to  protection. 
Before  the  tariff  of  1890  there  was  no  tin-plate  manu- 
factured in  this  countr}^.  The  protection  afforded  by 
that  measure  made  the  investment  of  capital  in  the 
manufacture  of  tin-plate  in  this  country  possible. 
Through  the  use  of  modern  methods  and  Yankee 
14 


2IO  TRUSTS  AND   THE   PUBLIC  , 

industry,  the  American  producers  soon  undersold  the 
foreign  producers  and  supplied  the  entire  American 
market.  As  soon  as  it  became  an  established  industry, 
competition  became  sufficiently  severe  to  reduce  the 
price  not  only  far  below  the  foreign  but  below  the 
profit-making  point  of  all  except  a  small  proportion  of 
the  very  best  concerns.  Reorganization  for  the  sake 
of  economy  and  efficiency  became  necessary  in  that  in- 
dustry as  it  has  in  hundreds  of  others,  and  in  fact  as  it 
always  does  with  industrial  development.  What  were 
the  plants  of  a  number  of  tin-plate  manufacturers  are 
now  the  property  of  one  corporation.  As  previously 
explained  in  this  magazine,^  although  the  price  of  tin- 
plate  has  been  somewhat  increased  with  the  rise  of 
■wages  and  raw  material,  tin-plates  are  $1.10  a  box  less 
than  when  they  were  furnished,  duty  free,  by  English 
manufacturers. 

The  existence  of  the  industry  in  this  country  was 
due  to  the  protective  tariff ;  but  the  reorganization  of 
smaller  concerns  into  a  large  one  was  due,  not  to  the 
tariff,  but  to  the  competitive  rivalry  and  needed  econ- 
omy in  the  business.  There  is  no  other  industry  in 
the  country  to  which  Havemeyer's  statement  is  even 
approximately  applicable.  Take  the  great  Carnegie 
concern,  which  is  as  much  a  trust  as  is  the  Standard 
Oil  Company  or  the  American  Sugar  Refining  Com- 
pany, or  any  other  large  corporation,  called  "  trust," 
in  the  country.  It  is  one  of  the  largest  iron  and 
steel  works  in  the  world.  It  j)robably  could  not  have 
come  into  existence  if  there  had  been  no  protective 
tariff  for  iron  and  steel,  yet  does  Mr.  Ilavemeyer  or 

1  May  number,  1899. 


THE   TARIFF  AND   TRUSTS  211 

anybody  else  in  his  senses  pretend  to  say  that  the 
Carnegie  Company  is  a  monster  trust  created  by  the 
tariff.  The  tariff  gave  the  first  stimulating  opportu- 
nity to  the  iron  and  steel  business,  but  Carnegie  proved 
to  be  a  superior  industrial  organizer.  Under  his 
leadership  and  management,  the  Carnegie  corporation 
became  a  financial  success.  It  acquired  the  leadership 
in  its  line  in  this  country,  and  may  ultimately  in  the 
whole  world.  It  is  now  furnishing  steel  rails  to 
foreign  countries  at  a  lower  rate  than  the  manufactur- 
ers of  any  other  country. 

The  steam  and  surface  railroad  corporations  and 
syndicates,  large  telegraph  companies,  colossal  corpo- 
rate concerns  in  every  line  of  industry,  are  the  result  of 
one  general  cause,  namely :  the  extraordinary  indus- 
trial development  of  the  country.  "Wherever  industrial 
progress  is  rapid  and  permanent  large  enterprises  arise, 
and  conversely  where  industrial  development  is  slow 
and  meager,  small  individual  concerns  with  restricted 
capital,  primitive  methods,  high  prices  and  low  wages 
prevail.  Hence  large  concerns  are  more  numerous  in 
the  United  States  than  anywhere  else,  and  as  industry 
develops  they  are  making  their  appearance  in  England, 
France,  Germany  and  other  countries.  The  simple 
and  well-nigh  obvious  fact  is  that  large  corporations 
follow  business  prosperity  and  progress,  whether  under 
protection  or  free  trade.  Whatever  contributes  to  in- 
dustrial development  helps  to  build  up  large  corpora- 
tions, and  whatever  will  destroy  business  prosperity 
will  stop  the  growth  of  so-called  trusts.  To  say  that 
the  tariff  is  the  mother  of  trusts  is  to  say  that  the  tariff 
is  the  mother  of  business  prosperity,  which  is  not 
wholly  without  truth. 


212  TRUSTS  AND   THE   PUBLIC 

Witness  the  great  surface  railroad  corporations  in 
l^ew  York  and  other  large  cities  throughout  the 
country.  They  come  the  nearest  to  being  monopolies 
of  anything .  in  the  land ;  they  have  given  and  are 
giving  cheaper  and  better  service  than  was  ever  before 
rendered  to  the  public  and  are  making  immense  profits, 
all  of  which  is  made  possible  by  the  general  prosperity 
of  the  community,  without  which  they  would  not  have 
come  into  existence  here  any  more  than  they  have  in 
China.  Only  to  the  extent  that  protection  has  pro- 
moted that  prosperity  has  it  helped  to  bring  these  great 
corporations  into  existence. 

It  is  high  time  that  at  least  the  decent  part  of  the 
American  press  awoke  to  the  importance  bf  infusing 
integrity  and  fairness  into  the  discussion  of  public 
questions.  The  political  and  social  integrity  of  the 
nation  is  far  more  important  than  any  party  success. 
'No  amount  of  political  advantages  can  compensate  for 
debauching  public  opinion,  misleading  and  confusing 
the  people  on  great  industrial  questions. 

Tariffs  and  trusts  should  be  discussed  on  their 
merits,  separately.  If  large  corporations  are  a  menace 
to  public  welfare,  let  that  fact  be  established  by  the 
data  connected  with  corporate  industry,  and,  if  tariffs 
are  a  bad  thing,  let  that  be  shown  by  the  facts  arising 
out  of  tariff  legislation.  But  to  confound  the  two  when 
they  have  no  necessary  connection  is  demagogy,  not 
discussion.  To  raise  the  alarm  that  large  corporations 
are  monopolies  which  oppress  and  rob  the  people,  and 
in  the  same  breath  declare  that  protective  tariffs  are  the 
cause  of  trusts,  is  at  once  to  juggle  with  subjects  and 
destroy  popular  confidence  both  in  our  political  and 
industrial  institutions. 


XYL 
CEUSADE  AGAINST  PEOSPEEITY.* 

The  United  States  in  many  respects  is  unique,  but 
in  nothing  is  it  so  strikingly  different  from  all  other 
countries  as  in  the  political  attitude  of  the  people  to- 
wards business.  It  is  a  common  occurrence  in  repre- 
sentative governments  for  the  existing  ministry  to  be 
defeated  through  the  influence  of  hard  times.  Disraeli 
once  said  that  no  English  ministry  could  withstand 
three  bad  harvests.  But  a  very  poor  ministry  can 
keep  power  with  good  times.  This  tendency  to  make 
political  confidence  depend  chiefly  on  business  prosper- 
ity prevails  in  every  country  except  the  United  States. 

By  some  peculiarity  of  temperament  or  psychological 
influence  the  people  of  the  United  States  seem  to  de- 
light in  using  their  political  power  against  business 
development  and  prosperity.  Several  times  in  the 
midst  of  prosperity  a  political  movement  has  arisen 
demanding  a  radical  change  in  the  fiscal  or  tariff  po- 
licy, resulting  in  the  destruction  of  business  confidence, 
paralysis  of  industry,  and  sometimes  a  financial  panic, 
— witness  1892-93.  As  the  result  of  that  we  had  six 
years  of  business  depression  and  social  hardship.  Now, 
under  a  return  to  the  former  policy,  business  confidence 
and  prosperity  have  returned, — and   we   are  getting 

*  Published  in  Gunton^s  Magazine  of  September  1899. 

213 


214  TRUSTS  AND   THE  PUBLIC 

ready  to  destroy  it  again.  In  1892  the  means  of  at- 
tacking business  prosperity  was  the  overthrow  of  the 
tariff,  now  it  is  the  overthrow  of  corporations.  The 
war  cry  is  being  raised  from  one  end  of  the  land  to  the 
other :   "  Down  with  trusts." 

This  is  not  merely  the  work  of  a  few  crank  reform- 
ers and  irresponsible  agitators,  but  it  is  being  made  the 
issue  of  a  systematized  political  campaign,  supported 
by  numerous  independent  movements.  Indeed,  it 
almost  seems  as  if  the  American  people  would  soon  be 
as  mad  on  the  trust  question  as  the  French  people  are 
on  the  Dreyfus  question. 

If  this  movement  against  trusts  is  to  take  on  a 
practical  form,  in  common  justice  to  the  people  the 
object  should  be  frankly  presented.  Suppose  the  forth- 
coming conference  of  governors  is  a  success  and  all  the 
states  act  together,  what  is  to  be  accomplished  ?  Of 
course  the  talk  is  that  this  great  national  uprising  is  to 
abolish  trusts.  But  suppose  there  are  no  trusts.  What 
then  ?  The  army  has  been  organized,  the  guns  are 
loaded,  and  somebody  must  be  killed  to  justify  the 
effort.  If  there  are  no  trusts,  then  of  course  an  attack 
must  be  made  upon  corporations. 

Kow  that  is  exactly  the  state  of  the  case.  There 
is  not  a  trust  in  the  United  States.  There  never  were 
more  than  about  half  a  dozen,  and  they  have  all  been 
dissolved  and  converted  into  large  corporations.  In 
reality,  then,  the  war  on  trusts  is  a  war  on  corporations 
pure  and  simple.  Large  corporations  may  be  a  very 
bad  thing  for  the  community,  and  if  so  they  ought  to 
be  abolished,  but  an  agitation  for  their  abolition  should 
be  conducted  on  honest  principles.  It  should  be  def- 
initely understood  that  it  is  a  crusade  against  large 


CRUSADE   AGAINST    PROSPERITY  21$ 

corporations.  To  call  it  a  crusade  against  trusts  is  to 
practise  a  fraud  upon  the  people.  At  least  let  us  have 
the  people  who  are  to  vote  these  business  concerns  out 
of  existence  know  what  they  are  voting  against.  Cer- 
tainly  before  the  people  of  this  country  can  be  ex- 
pected to  support  such  a  crusade  they  have  a  right  to 
know  something  about  what  it  will  accomplish. 

First,  then,  are  all  corporations  to  be  suppressed  ? 
If  so  the  proposition  is  very  simple.  Of  course  this 
can  be  done  if  the  people  want  it,  but  it  would  stop 
every  railroad,  trolley,  cable  and  horse-car  system  in 
the  country,  and  would  close  more  than  ninety  per 
cent,  of  the  manufacturing  and  business  concerns. 
In  fact,  nearly  all  businesses  larger  than  the  peanut 
stand  would  have  to  be  dissolved  and  re-distributed 
into  small  efforts,  about  the  equivalent  of  what  existed 
in  the  walled  towns  in  the  thirteenth  century.  It 
would,  in  fact,  wipe  out  about  all  the  economic  effec- 
tiveness the  last  five  centuries  of  industrial  evolution 
have  produced.  For  reduction  to  economic  simplicity 
and  thorough  abolition  of  monopoly  this  would  leave 
little  to  be  desired.  It  would  accomplish  the  object 
completely,  but  it  would  reduce  us  to  barbarism.  Of 
course  nobody  wants  that. 

Yet  that  is  the  simple  case  if  the  war  is  against  all 
corporations.  If  it  is  not  against  all  corporations,  then 
against  which  is  the  war  to  be  directed  ?  If  we  are  not 
to  suppress  all,  there  must  be  some  specific  line  of  dis- 
tinction between  those  "to  be  damned  "  and  those"  to 
be  saved."  There  must  be  some  wav  of  distino:uishing' 
the  sheep  from  the  goats.  "What  shall  it  be  ?  It  can- 
not be  anything  relating  to  the  economic  or  political 
principle  of  the  organization,  because  in  these  respects 


2l6  TRUSTS  AND   THE   PUBLIC 

they  are  all  alike.  Nor  is  it  in  the  character  of  the 
industry,  because  the  corporation  principle  applies  to 
all  industries.  There  is  only  one  difference  between 
them  and  that  is  the  size  of  their  capital.  Well,  then, 
where  shall  the  line  be  drawn  ?  Shall  it  be  at  one 
hundred  thousand,  at  half  a  million,  a  million,  five 
millions,  ten  millions,  fifty  millions  or  a  hundred  mil- 
lions ?  Where  ?  If  the  line  is  to  be  drawn  anywhere, 
some  economic  or  political  reason  must  be  given  for 
drawing  it  there.  Upon  what  economic  principle  or 
experience  can  a  distinction  be  made  ?  Some  of  the 
economists  who  are  to  address  the  Chicago  conference 
or  the  governors  who  are  to  enlighten  the  St.  Louis  con- 
ference are  in  honor  bound  to  give  this  information  to 
the  people,  or  else  abandon  their  movement.  If  there 
is  any  reason,  economic,  moral  or  political,  why  a  cor- 
poration of  half  a  million  capital  is  a  good  thing  and 
one  with  a  million  or  five  millions  capital  is  bad,  then  a 
benighted  world  is  waiting  for  the  information.  Thus 
far  not  a  ray  of  light  has  ever  been  shed  upon  that 
point,  though  acres  of  literature  on  the  subject  have 
been  published. 

How  came  these  corporations  to  get  so  large  ?  Why 
did  they  organize  at  all  ?  There  is  one  general  reason 
and  it  is  this :  in  the  effort  to  make  the  most  of  in- 
vested  capital,  it  was  found  by  a  long  series  of  experi- 
ments that  under  certain  conditions  large  capital  could 
be  used  to  greater  advantage  than  small  capital ;  it 
could  produce  more  at  the  same  cost,  give  a  larger 
profit,  sell  the  products  at  lower  prices,  and  give  more 
permanent  employment  to  labor  at  higher  wages. 
Every  little  addition  to  the  size  of  industrial  concerns 
has  been  made  for  these  reasons.    As  the  experiments 


CRUSADE   AGAINST   PROSPERITY  21/ 

proved  a  success  they  were  increased,  and  so  from 
small  individual  concerns  to  partnerships  and  corpora- 
tions the  process  went  on  and  on,  and  if  not  arbi- 
trarily interrupted  will  continue  to  go  on  just  so  long  as 
it  will  yield  these  advantages.  Just  so  long  as  adding 
another  million  to  the  plant  Avill  increase  the  earning 
capacity  of  both  the  old  and  new  capital,  the  additions 
will  continue  to  be  made,  and  as  soon  as  the  point  is 
reached  where  to  increase  the  size  only  increases  the 
unwieldiness  and  does  not  increase  the  economy  it  will 
stop. 

Clearly,  then,  the  history  of  industrial  growth  and 
prosperity  is  the  history  of  corporate  development. 
Without  corporations  productive  efficiency  could  not 
have  progressed  beyond  the  economic  status  of  the 
small  individual  concerns  of  at  least  a  century  ago.  A 
war  on  corporations,  without  some  definite  economic 
basis  of  discrimination,  then,  is  simply  a  war  on  busi- 
ness success.  That  is  the  character  of  the  present 
movement.  It  is  based  upon  no  principle  of  industrial 
management  or  public  policy.  It  recognizes  no  line  of 
distinction  between  the  good  and  the  bad,  but  it  is  a 
blind,  muddled,  indiscriminate  agitation  against  cor- 
porate capital,  which  means  a  crusade  against  business 
prosperity. 

What  would  be  accomplished  if  this  crusade  against 
corporations  should  succeed  ?  A  few  instances  serve 
to  illustrate  what  mio-ht  be  exoected.  Take,  for  in- 
stance,  the  Standard  Oil  Company,  which  is  constantly 
cited  as  a  conspicuous  object  of  attack.  The  petroleum 
industry  began  in  1859.  From  then  until  about  1871 
illuminating  oil  was  produced  by  a  large  number  of 
small  concerns.     The  oil  was  very  poor  and  dangerous 


2l8  TRUSTS   AND   THE   PUBLIC 

to  use.  From  1863  inclasive,  Trhen  oil  production  was 
becoming  an  established  business  and  full  statistics  are 
a,vailable,  until  1871,  the  gold  price  fell  from  30^g- 
cents  to  21j\  cents  per  gallon,  or  29^^  per  cent.  From 
1871  to  1880,  under  the  Standard  Oil  Company,  the 
price  fell  from  21^^  to  9|^  cents,  or  58  per  cent.,  and 
under  the  "  trust  "  it  has  fallen  from  9}  to  5^  cents,  or 
37_R_  per  cent.  The  average  yearly  prices  in  gold  for 
the  whole  period  from  1861  to  1898  are  as  follows : 

Average  Average 

Yearly  Yearly- 

Price  Price 

Year  (Cents)  Year  (Cents) 

1863 30xV  1881 8 

1864 31|  1883 7| 

1865 S'7j\  1883 8^ 

1866 30iV  1884 8^ 

1867 20|  1885 8^ 

1868 20|  1886 7^ 

1869 244  1887 6| 

1870 22/^  1888 7^ 

1871 21/j  1889 7i 

1872 21  1890 7f 

1873 16  1891 6^?5 

1874 11-fV  1892 6yV 

1875 llfV  1893 5i 

1876 17xV  1894 5i 

1877 15  1895 ■.  7i 

1878 lOf  1896 7 

1879 8^  1897 b,% 

1880 9^  1898 , .  5^ 

This  immense  reduction  of  the  price,  besides  im- 
provement of  the  quality,  has  been  accomplished  by  no 
aid  of  legislation,  but  by  the  economic  use  of  capital 
and  unlimited  scientific  experiment  in  the  process  of 
refining  and  handling  the  oil.  This  would  have  been 
impossible  by  any  small  capital.  The  pipe  line  itself 
could  not  have  been  bui]t  by  individual  effort  or  any- 
thing short  of  a  colossal  organization.  By  the  increase 
of  capital  and  development  of  new  devices  this  con- 


CRUSADE  AGAINST   PROSPERITY  219 

cern  has  developed  an  enormous  industry ;  from  a 
product  in  1859  of  9,500  barrels  to  35,165,990  barrels 
in  1897. 

In  the  early  seventies  petroleum  was  discovered  in 
Russia,  and  when  the  Standard  Oil  Company  made  its 
great  improvements  in  the  methods  and  processes  of 
refining  and  completed  its  pipe-line  transportation,  at 
an  outlay  of  millions  of  dollars  in  experimentation  and 
construction,  European  capital  organized  an  immense 
syndicate  and  adopted  all  the  improved  methods  of  the 
Standard  Oil  Company  in  developing  the  oil  industry 
in  Russia.  They  have  increased  the  Russian  produc- 
tion from  100,000  barrels  in  1870  to  50,697,000  barrels 
in  1897,  which  is  15,531,010  barrels  more  than  the 
total  American  output.  The  record  of  Russia's  oil 
production  by  years,  since  1870,  is  follows  : 

Year  Barrels   Year  Barrels 

1870 100,000  1884 8,841,000 

1871 150.000  1885 11,394.000 

1873 175,000  1886 14.734.000 

1873 250,000  1887 16.208,000 

1874 500.000  1888 18,860,000 

1875 750.000  1889 20.137,000 

1876 1.000,000  1890 23,477.000 

1877 1,350,000  1891 28,390.000 

1878 2,000,000  1893 29,373.000 

1879 3,350,000  1893 33,104,000 

1880 3.455.000  1894 80.383,000 

1881 3,929,000  1895 38,340,000 

1883 4,911,000  1896 46.353.000 

1883 5,893,000  1897 50,697,000 

Thus,  with  the  best  American  methods,  developed 
at  the  cost  of  the  experiments  of  American  capital, 
and  paying  less  than  one-fourth  American  wages,  and 
with  the  most  fertile  oil  lands  in  the  world,  Russia  has 
become  an  immense  rival  in  the  petroleum  industry. 
The  Russian  government  protects  the  Russian  market 


220  TRUSTS   AND   THE   PUBLIC 

by  a  200  per  cent,  clut}^,  so  that  the  Rassian  oil  com- 
pany has  a  monopoly  of  the  Russian  market.  It  has 
cheap  labor  a,nd  American  productive  methods  to 
compete  against  the  Standard  Oil  Company  in  the  rest 
of  the  world. 

On  the  other  hand,  by  its  superior  economy,  large 
capital  and  highly  developed  management,  the  Stand- 
ard Oil  Company  has  prevented  Russian  oil  producers 
from  supplying  the  American  market.  By  the  use  of 
immense  capital  and  efficient  management  the  Ameri- 
can producers,  besides  supplying  the  American  market, 
in  1897  exported  to  the  different  countries  of  Europe, 
Asia  and  elsewhere,  outside  of  Russia,  994,297,757  gal- 
lons of  refined  oil,  which,  at  the  low  prevailing  price, 
was  equivalent  to  bringing  $59,057,574  in  gold  into 
the  country.  The  exports  for  the  last  ten  years  have 
been  as  follows : 

Year  Gallons  Dollars       Year  Gallons  Dollars 

1888 572.457,975  48,105.703  1893 871,757,017  41,117,814 

1889 680,705,456  53.293,299  1894 894,162.155  40,483.088 

1890 693.829,848  52.270,953  1895 853,126.130  56,223,425 

1891 673,905.577  46,174,835  1896 931.785.022  62,764.278 

1892 744,638,463  42,729,157  1897 994,297,757  59,057,547 

Here,  then,  is  a  concern  which,  by  the  power  of  its 
large  capital,  gives  employment  to  35,000  American 
laborers,  pays  $100,000  a  day  in  wages,  and  brings 
nearly  $60,000,000  of  gold  into  the  country  every 
year ;  which  would  be  lost  to  this  country  but  for  the 
economic  energy  and  superiority  of  the  Standard  Oil 
Company.  Who  would  be  benefited  if  this  concern 
were  forced  to  disband?  Small  refineries,  such  as 
those  now  outside  the  Standard,  could  not  even  hold 
the  American   market,   if    subjected   to   competition 


CRUSADE   AGAINST   PROSPERITY.  221 

with  the  Paissians,  Moreover,  the  Standard  Oil  Com- 
pany furnishes  an  unlimited  cash  market  for  every 
barrel  of  petroleum  produced  in  this  country. 

Take  the  raih'oads  as  another  instance.  Next  to 
the  Standard  Oil  Company  probably  the  railroads  are 
the  most  conspicuous  objects  of  attack  by  this  new 
crusade.  If  the  recommendations  of  Mr.  Cleveland  in 
his  last  message,  and  the  program  of  the  coming  con- 
ference of  governors  in  St.  Louis,  are  to  be  consum- 
mated, then  the  great  railroad  corporations  must  be 
broken  up,  or  confiscated  by  the  government,  which  is 
what  the  socialist  part  of  the  movement  most  desires 
and  really  hopes  for. 

In  1873,  with  the  relatively  small  and  unintegrated 
railroad  corporations,  it  cost  2.21  cents  a  mile  to  ship 
a  ton  of  merchandise.  By  the  steady  enlargement  of 
sj^'stems  and  economizing  of  costs,  without  lowering 
but  in  many  instances  raising  wages,  the  freight  charge 
has  been  gradually  lowered  from  2.21  cents  a  mile  in 
1873  to  about  .75  of  a  cent  a  mile  in  1898,  a  fall  of 
about  64  per  cent.,  as  will  be  seen  by  the  following 
table : 

Average  Average 

rate  per  rate  per 

ton  per  ton  per 

Miles  of               mile  Miles  of  mile 

Years                  Railroad           (cents)  Years  Railroad  (cents) 

1873 70,268            2.210  1886 1B6,379  1.042 

1874 72.385            2.040  1887 149,2.j7  1.034 

1875 74.096            1.810  1888 156,169  0.977 

1876 76,808            1.855  1889 161,353  0.970 

1877 79,088            1.524  1890 166,698  0.927 

1878 81,767            1.401  1891 170,769  0.929 

1879 86,584            1.201  1892 175,188  0.941 

1880 93,296            1.348  1893 177,465  0.893 

1881 103,143            1.264  1894 179.393  0.864 

1882 114,712            1.236  1895 181,021  0.839 

1883 121,455            1.224  1896 182,777  0.806 

1884 125.379            1.125  1897 184,428  0.798 

1885 128,361           1.036  1898 186,396  0.753 


222  TRUSTS   AND   THE   PUBLIC 

It  will  be  seen  that  during  the  last  twenty-four  years, 
in  which  the  railroads  have  developed  into  larger  and 
larger  corporations,  the  cost  of  service  to  the  public 
has  been  lessened  more  than  one  half,  to  say  nothing 
of  the  immensely  improved  passenger  service  facilities 
and  smoother  roadbeds. 

The  simple  English  of  these  facts  is  that  to  resolve 
the  railroad  corporations  back,  even  into  the  original 
small  concerns,  which  were  corporations,  would  prob- 
ably be  to  more  than  double  the  cost  of  railroad  ser- 
vice to  the  people.  Who  would  be  benefited  by  such 
a  performance  ?  It  would  be  a  setback  of  a  quarter  of 
a  century,  with  an  injury  to  everybody  and  benefit  to 
nobody.  Are  the  American  people  ready  for  any  such 
retrogressive  folly? 

Kext  to  the  steam  railroad  corporations,  those  most 
railed  against  are  the  surface  railroad  system  syn- 
dicates, especially  those  which  control  the  surface  rail- 
road sj'stems  in  our  large  cities.  Take  New  York  as 
an  example.  All  the  surface  railroading  in  New  York 
city  is  in  the  hands  of  two  companies.  It  was  once  in 
the  hands  of  a  dozen  or  more  companies.  Every  avenue 
line  and  every  crosstown  line  was  run  by  a  separate 
company.  Under  that  regime  the  motive  power  was 
horses,  and  the  public  had  to  pay  a  separate  five-cent 
fare  for  every  car  boarded.  With  the  discovery  of 
new  motive  power,  trolleys,  cable  and  lastly  under, 
ground-conduit  trolleys,  larger  capital  was  needed  to 
get  the  best  efi'ects  from  the  new  methods,  and  to-day 
the  citizens  of  New  York  (and  by  the  same  process  of 
nearly  all  the  cities  in  the  country)  can  ride  in  cars 
many  times  as  commodious  and  wholesome,  twice  as 
fast,  ten  times  as  far,  and  be  transferred  to  numerous 


I 


CRUSADE  AGAINST  PROSPERITY.  22$ 

other  lines,  all  for  one  fare.  Under  this  system  of 
concentrated  capital  and  management  citizens  of  New 
York  can  now  board  a  trolley  on  the  New  York  side 
of  Brooklyn  Bridge,  cross  the  bridge  and  ride  some 
dozen  miles  to  Coney  Island,  for  five  cents,  which  for- 
merly by  any  other  route  cost  40  and  50  cents.  By 
an  agreement  between  the  Third  Avenue  Company 
and  elevated  road  system,  which  is  practically  another 
large  integration,  passengers  can  travel  from  the  Bat- 
tery to  New  Eochelle,  a  distance  of  twenty -five  miles 
or  more,  for  eight  cents, — a  five-cent  fare  and  a  three- 
cent  transfer, — which  by  the  steam  railroads  costs 
about  40  cents. 

The  next  natural  step,  one  that  will  come  if  not 
arbitrarily  interfered  with,  will  be  to  put  the  entire 
local  transit  system  of  the  metropolis,  both  surface  and 
elevated,  under  one  management.  Then  every  road  in 
every  direction  will  be  open  to  the  public  for  a  single 
fare,  transfers  being  accepted  from  any  to  any  other 
cars  in  the  entire  city.  What  will  the  new  crusade  do 
with  this  ? 

If  its  policy  is  to  be  carried  out  the  great  meat-pack- 
ing establishments  of  Chicago,  the  steel  manufacturing 
corporations  of  Pittsburg,  will  have  to  be  disbanded 
and  industry  relegated  back  to  the  primitive  methods 
existing  in  the  ante-corporation  period.  This  would 
practically  mean  an  increase  of  from  50  to  100  per 
cent,  in  the  price  of  nearl}"  all  machine  made  products. 

Of  course  it  will  be  said  that  this  is  not  what  is  in- 
tended, but  what  has  already  been  done  justifies  the 
belief  that  the  madness  will,  if  it  can,  go  to  the  full 
length.  Take  for  example  the  state  of  Ohio.  It  has 
practically  legislated  the  Standard  Oil  Company  out 


224  TRUSTS   AND   THE   PUBLIC 

of  the  state.  Through  a  system  of  legal  persecution, 
doing  business  in  Ohio  has  been  made  intolerable  and 
the  Avorks  which  employed  thousands  of  men  and  dis- 
tributed hundreds  of  thousands  of  dollars  a  year  in 
Cleveland  and  other  cities  in  that  state  are  being  closed 
and  removed.  It  will  not  take  much  of  this  to  bring 
the  people  of  Ohio  to  a  realizing  sense  of  the  economic 
madness  of  this  policy. 

In  Michigan  also  the  work  goes  bravely  on,  but  in 
even  greater  degree.  A  law  was  passed  recently,  un- 
der Governor  Pingree's  influence,  making  it  a  misde- 
meanor to  make  a  contract  affecting  the  price  of  any 
commodity  for  future  delivery.     The  law  says  : 

"  It  shall  hereafter  be  unlawful  for  two  or  more 
persons  to  make  or  enter  into  or  execute  or  carry  out 
any  contracts  or  obligations  or  agreements  by  which 
they  shall  bind  themselves  to  sell  any  commodity  be- 
tween them  so  as  to  directly  or  indirectly  preclude  a 
free  and  unrestricted  competition  among  themselves." 

The  penalty  for  violating  this  law  is  a  fine  of  from 
$50.00  to  $5,000.00,  or  imprisonment  for  a  term  of  .six 
months  to  one  year,  or  both.  iNow,  if  a  person  cannot 
enter  into  or  carry  out  any  contract  or  agreement 
binding  himself  to  sell  a  commodity  at  a  special  price 
for  any  time  in  the  future,  then  there  is  no  freedom 
of  contract  whatever.  Not  a  single  large  industry 
could  be  conducted  successfully  under  such  a  law.  It 
would  be  the  entire  suppression  of  modern  methods  of 
business. 

The  legislators  of  Texas  and  Kentucky  and  other 
states  are  vying  with  each  other  as  to  which  can  pass 
the  most  effective  business-killing  legislation.  The 
more  this  anti-trust  movement  is  considered  in  the  light 


CRUSADE  AGAINST  PROSPERITY  22$ 

of  its  own  declarations  and  accomplishments,  in  the 
light  of  logic,  common  sense  and  economic  sanity,  the 
clearer  it  becomes  that  it  is  a  fanatical,  misguided 
crusade  against  business  prosperity,  public  welfare  and 
national  progress. 


XYII. 
FEOM  THE  PUBLIC  POINT   OF  YIEW  ^ 

The  trust  question  is  only  a  new  phase  of  an  old 
problem — the  problem  of  free  industrial  enterprise. 
Notwithstanding  the  well-known  fact  that  the  mar- 
velous progress  of  the  last  three-quarters  of  a  century 
is  mainly  due  to  the  introduction  of  improved  methods 
of  industry,  every  improvement  since  Wyatt's  spinning 
frame  and  Hargreaves'  spinning  jenny  has  had  to  fight 
its  way  against  the  popular  prejudice  of  the  time. 
The  hand-loom  weavers  marched  through  England  and 
broke  the  power  looms.  Hargreaves,  Arkwright  and 
Crom]3ton  were  driven  from  their  homes  for  inventing 
new  methods  of  spinning. 

Now,  after  three-quarters  of  a  century's  experience, 
in  which  the  fallacy  of  this  policy  has  become  notori- 
ous, we  are  face  to  face  with  another  movement  of  the 
same  character.  The  present  agitation  against  trusts 
has  all  the  characteristics  of  the  anti-machinery  riots 
of  a  century  ago.  It  pervades  the  attitude  of  both 
laborers  and  business  men  alike.  Workingmen  give 
about  the  same  reasons  for  opposing  the  introduction 
of  new  machines  as  did  the  neighbors  of  Crompton 
and  Arkwright  for  breaking  their  spinning  frames.  The 
business  men  who  twenty-five  years  ago  were  among  the 

*  Address  delivered  at  the  Chicago  trust  conference,  Septem- 
ber 14,  1899. 
226 


FROM   THE   PUBLIC   POINT   OF  VIEW  22/ 

hated  organizers  of  corporations  are  now  among  the 
amtators  against  trusts.  And  now  the  movement  is 
taking  on  a  political  form.  Men  of  national  repute, 
and  leaders  of  great  political  parties,  candidates  for 
the  highest  and  most  responsible  positions  in  the 
nation,  are  asking  the  people  to  reverse  the  policy  of 
industrial  freedom  and  return  to  the  doctrine  of  arbi- 
trary paternalism,  specifically  to  suppress  large  cor- 
porations. Are  the  American  people  ready  for  such 
a  step  ? 

There  is  only  one  point  of  view  from  which  this  subject 
can  properly  be  considered — the  interest  of  the  public; 
the  public  as  representing  the  consumers  who  are  in- 
terested in  superior  commodities  at  low  prices ;  the 
public  as  representing  the  laborers  who  are  interested 
in  permanent  employment  and  good  wages ;  the  pub- 
lic as  representing  the  farmers  who  are  interested  in 
cheap  transportation  and  the  advantages  of  the 
modern  products  of  science,  art  and  literature.  It  is 
in  these  aspects  of  the  subject,  and  not  in  the  confus- 
ing clamor  and  sensational  subterfuge  of  campaign 
oratory,  that  the  American  people  are  interested.  The 
question  for  this  conference  to  ask,  the  question  for 
the  people  of  the  United  States  to  ask,  is  :  Are  trusts 
inimical  to  public  welfare  in  all  or  any  of  these  re- 
spects ? 

It  must  be  remembered,  first  of  all,  that  the  trust, 
be  it  good  or  bad,  is  only  one  among  a  large  number 
of  experiments  in  industrial  organization,  which  the 
progress  of  the  last  fifty  years  has  evolved.  One  of 
the  marked  features  of  the  economic  development  of 
the  century  is  the  radical  change  that  has  taken  place 
in  the  character  of  competing  units.     Under  the  primi- 


228  TRUSTS   AND   THE   PUBLIC 

tive  band  labor  metbod,  tbe  competing  unit  was  tbe 
individual.  Witb  tbe  development  of  factory  metbods, 
tbe  individual  as  a  competing  unit  was  superseded  by 
partnersbips,  because  tbey  could  more  economically 
employ  tbe  new  metbods.  "Witb  tbe  growtb  of  inven- 
tion, partnersbips  were  superseded  by  corporations. 
Witb  tbe  growing  completeness  of  macbinery  and 
magnitude  of  business,  corporations  grew  larger  and 
larger,  until  tbe  corporation  is  now  tbe  prevailing 
industrial  form  in  tbe  most  advanced  countries. 

Nor  is  this  limited  to  tbe  capitalist  side  of  industry. 
It  is  equally  cbaracteristic  of  tbe  labor  side.  Tbe  com- 
peting unit  in  tbe  labor  market  is  no  longer  tbe  in- 
dividual laborer,  but  tbe  group,  tbe  union.  Tbe  fac- 
tory system  has  made  it  impossible  for  individual 
laborers  to  be  competitors,  because  it  is  impossible  for 
them  to  make  individual  contracts.  In  all  matters 
pertaining  to  wages,  bours  of  labor,  conditions  of 
work,  wbetber  by  piece  or  by  tbe  day,  it  is  tbe  group 
and  not  tbe  individual  tbat  is  considered.  Eacb  fac- 
tory, and  in  most  instances  eacb  industry,  pays  uniform 
wages,  works  tbe  same  bours,  and  bas  substantially 
tbe  same  conditions,  and  wben  tbey  are  altered  for  one 
tbey  are  altered  for  all.  In  sbort,  the  progress  during 
tbe  nineteenth  century  bas  irrevocably  established  the 
group  as  tbe  competing  unit ;  the  union  as  the  unit  on 
tbe  labor  side,  tbe  corporation  as  the  unit  on  tbe 
capital  side. 

Now,  the  trust  was  one  of  tbe  experiments  in  tbe 
evolution  of  this  group  unit.  Numerous  forms  of 
organization  and  association  were  tried.  Corners, 
associations  to  fix  prices,  were  tried  ;  but  these  were 
uneconomic  and  failed,  usually  wrecking  somebody  in 


FROM   THE   PUBLIC   POINT   OF   VIEW  229 

the  collapse.  The  trust  was  another  form.  It  differed 
from  these  in  that  it  was  an  attempt  to  integrate 
productive  forces.  Corners  and  trade  associations 
were  mere  manipulators  of  prices,  not  producers. 
Trusts  were  hona  fide  producers. 

The  difference  between  the  trust  and  the  ordinary- 
corporations  is  not  economic,  but  legal.  The  trusts 
are  a  formal  merging  of  a  number  of  corporations  or 
firms  under  one  management,  which  holds  the  property 
in  trust  for  its  original  owners,  giving  certificates  for 
their  respective  claims.  There  have  been  very  few 
hona  fide  trusts  ;  the  Standard  Oil  trust,  the  sugar 
trust  and  a  few  others.  But,  through  the  intense 
popular  opposition,  resulting  in  adverse  legislation, 
these  have  all  disappeared.  They  have  been  disbanded 
and  converted  into  simple  corporations,  with  capital 
stock  owned  by  whomsoever  chooses  to  invest,  and 
governed  by  the  majority  vote  of  the  stockholders. 
So  that,  if  there  was  anything  peculiar  or  alarming  in 
trusts,  the  evil  has  disappeared,  because  the  trust  is 
gone. 

In  reality,  then,  what  we  have  are  simply  corpora- 
tions. The  whole  question  which  this  conference  is 
called  to  consider  is  :  what  is  the  influence  of  larffe 
corporations  upon  public  welfare  ? 

First,  then,  what  is  the  effect  of  large  corporations 
upon  the  quality  and  price  of  the  communitj-'s  supply 
of  commodities  ?  This  question  is  one  of  fact,  and  can 
be  adequately  answered  only  by  experience.  The 
history  of  corporations  on  this  point  is  almost  too 
obvious  to  need  reciting.  The  evidence  abounds  on 
every  hand.  While  experience  difi'ers  in  different  in- 
dustries, as  it  necessarily  must,  the  tendency  is  univer- 


230  TRUSTS  AND   THE  PUBLIC 

sal  that  with  the  growth  of  large  corporations  the 
quality  of  the  commodities  improves,  and  the  prices 
fall.  It  was  in  obedience  to  this  principle  that  cor- 
porations came  into  existence,  A  long  series  of  ex- 
periments taught  that  under  certain  conditions  large 
capital  could  be  used  to  greater  advantage  than  small 
capital.  It  could  produce  more  at  the  same  cost,  give 
a  larger  aggregate  profit,  by  selling  the  products  at 
lower  prices.  As  the  experiments  proved  successful 
they  were  increased,  and  so  from  small  individual  con- 
cerns to  partnerships,  then  to  corporations,  the  process 
went  on  and  on,  and  if  not  arbitrarily  interrupted  will 
continue  to  go  on  just  so  long  as  it  will  yield  any  ad- 
vantage. Just  so  long  as  adding  another  million  to 
the  plant  will  increase  the  earning  capacity  of  both 
the  old  and  new  capital,  the  additions  will  continue  to 
be  made,  and  as  soon  as  the  point  is  reached  where  to 
increase  the  size  fails  to  increase  the  economy,  it  will 
stop.  Clearly,  the  history  of  industrial  growth  and 
prosperity  is  the  history  of  corporate  development. 
Without  corporations  productive  efficiency  could  not 
have  progressed  beyond  the  economic  status  of  the 
small  individual  concerns  of  the  last  century. 

The  era  of  corporations  in  this  country  is  since  the 
war.  It  is  during  that  period  that  our  industrial  ex- 
pansion has  been  so  enormous  and  the  great  corporate 
interests  have  developed.  Prices  of  the  leading  manu- 
factured products,  mostly  produced  by  corporations, 
and  some  of  them  by  very  large  corporations,  using 
most  modern  machinery,  have  fallen  varying  from  6 
to  40  per  cent.  At  the  same  time  wages  have  risen, 
chiefly  in  the  manufacturing  and  mercantile  industries, 
68  per  cent. 


FROM   THE    PUBLIC    POINT   OF   VIEW  23 1 

While  this  is  true  of  corporate  industries  in  general, 
as  compared  with  non-corporate  industries,  it  is  most 
markedly  true  of  very  large  corporations.  If  we  take 
the  concerns  where  millions  are  invested  by  a  single 
corporation,  like  the  Standard  Oil  Company,  the 
American  Sugar  Refining  Company,  the  great  rail- 
roads, the  Carnegie  Steel  Company,  we  find  that  their 
products  have  undergone  the  greatest  improvement  in 
quality  and  the  greatest  reduction  in  price.  Without 
the  immensely  large  capitals  invested  by  these  great 
corporations,  many  of  the  great  improvements  ac- 
complished daring  the  last  twenty  years  would  have 
been  absolutely  impossible.  Take  for  instance  the 
Carnegie  Company.  Nothing  short  of  tens  of  millions 
invested  under  one  management  could  have  developed 
the  extraordinary  improvements  which  have  revolu- 
tionized both  the  quality  and  price  of  iron  and  steel 
products.  With  small  concerns  of  less  than  a  million 
each,  that  could  not  have  been  done.  The  same  is 
true  of  our  great  railroad  systems.  I^o  small  or  in- 
dividual enterprise  could  have  given  us  the  marvelous 
development  in  railroading  of  the  last  twenty-five 
years,  which  has  constantly  improved  the  service  and 
so  greatly  reduced  the  cost  to  the  public.  In  18T3  it 
cost  2.21  cents  a  mile  to  transport  a  ton  of  freight. 
Through  the  increased  investments  and  improved  fa- 
cilities, the  price  has  been  gradually  reduced  year  by 
year  until  now  it  only  costs  75-hundredths  of  a  cent  a 
mile  per  ton.  The  surface  railroad  systems  through- 
out this  country  are  another  illustration  of  what  large 
corporations  can  and  do  accomplish.  It  used  to  cost 
ten  cents  to  ride  a  few  blocks  in  a  dingy,  dirty  horse 
car,  in  any  city  in  this  country.     With  the  develop- 


232  TRUSTS   AND   THE   PUBLIC 

ment  of  large  corporations,  electricity  has  superseded 
horses  ;  large,  light  and  wholesome  cars  have  replaced 
dingy  boxes,  and  fares  have  been  reduced  one-half, 
with  transfers  to  nearly  all  connecting  lines,  a  result 
that  could  not  have  been  accomplished  under  small 
separate  concerns. 

Next,  what  is  the  influence  of  corporations  upon 
the  conditions  of  labor  ?  It  is  commonly  asserted  that 
large  corporations  tend  to  destroy  the  laborer's  liberty 
and  individuality  by  making  him  a  part  of  a  produc- 
tive machine.  Mr.  Cleveland  sounded  this  note  in  his 
last  message  to  congress.  A  little  touch  of  fact  would 
show  this  to  be  a  pure  phantom  of  the  imagination. 
Nothing  could  be  more  contrarj'-  to  the  whole  history 
of  wage  labor.  If  there  were  any  truth  in  this,  we 
might  expect  to  find  that  laborers  had  more  freedom 
and  greater  individuality  before  the  wage  system  began. 
Yet  everybody  knows  that  then  they  had  neither 
liberty  nor  individuality  ;  that  it  was  not  until  long 
after  the  wage  system  came  that  laborers  acquired 
any  liberty,  political  rights  or  social  individuality. " 

The  laborer's  freedom  and  individuality  depend  upon 
two  things — permanence  of  employment  and  good 
wages.  Wherever  the  employment  of  labor  is  most 
permanent  and  wages  are  highest,  there  the  laborer  is 
most  intelligent,  has  the  greatest  freedom  and  the 
strongest  individual  identity.  Where  do  laborers  get 
these  conditions  ?  It  is  not  where  capital  is  small  and 
employers  are  poor.  On  the  contrary,  it  is  where 
large  corporations  prevail  that  wages  are  highest  and 
employment  most  continuous,  and  everybody  knows 
it  is  there  where  the  laborers  are  most  independent. 
It  is  notorious  that  large  corporations  have  the  least 


FROM   THE   PUBLIC   POINT   OF   VIEW  233 

influence  over  the  opinions  and  individual  conduct  of 
their  laborers.  Let  it  be  known  that  a  large  corpora- 
tion is  trying  to  influence  the  election  of  candidates 
for  ofiice,  and  that  is  the  signal  for  the  -working  men 
to  vote  against  them.  Instead  of  being  controlled  by 
the  corporations  they  act  almost  uniforml3''on  the  rule 
of  defying  and  opposing  them. 

Nor  is  there  any  loss  of  individual  liberty  in  becom- 
ing a  fractional  part  of  a  large  productive  concern. 
"What  society  wants  is  not  individuality  as  producers 
but  individuality  as  citizens.  What  we  need  is  that  the 
laborer  should  give  less  and  less  of  his  personal  energy 
to  earning  a  living  and  more  and  more  to  his  social  and 
individual  improvement.  A  permanent  stipulated  in- 
come is  the  first  step  towards  real  individual  freedom 
for  the  laborers.  Nothing  is  so  depressing  to  man- 
hood, nothing  makes  the  weak  so  cowardly,  as  pre- 
cariousness  of  income.  The  small  business  man  who 
does  not  know  from  quarter  to  quarter,  and  sometimes 
from  month  to  month,  whether  he  can  meet  his  obli- 
gations, is  neither  so  brave,  so  intelligent  nor  so  free 
a  citizen  as  the  wage  laborer  in  the  safe  employ  of  a 
large  corporation.  As  a  matter  of  fact,  the  corpora- 
tion and  banker  have  far  more  influence  over  the  votes 
of  small  business  men  whom  they  have  befriended  or 
patronized  than  they  have  over  their  own  laborers. 
A  laborer's  freedom  does  not  depend  upon  the  fact 
that  he  works  for  wages,  but  on  the  amount  of  his 
wages.  With  high  wages  and  permanent  employment 
the  laborer's  freedom  and  welfare  are  secured.  The 
laborer  has  not  a  single  inteiest,  social,  economic  or 
political,  in  the  existence  of  employers  with  small 
capital. 


234  TRUSTS  AND   THE   PUBLIC 

How  do  large  corporations  affect  the  interest  of  the 
farmers  ?  There  is  probably  no  class  in  the  community 
who  derive  more  benefit  from  the  economic  improve- 
ments of  large  corporations  than  the  farmers.  All 
the  great  improvements  in  tools,  architecture,  sanita- 
tion, domestic  appointments,  art,  literature  and  general 
refinements  are  the  products  of  industrial  centers 
where  large  capitalistic  enterprises  abound.  Every 
form  of  commodity  outside  of  food  which  enters  into 
the  farmer's  life  has  been  immensely  improved  and 
greatly  cheapened  by  the  efforts  of  large  corporations. 
Transportation,  which  is  an  important  item  in  the 
farmer's  economy,  has  been  reduced  50  per  cent,  during 
the  last  twenty-five  years.  While  the  farmer  has  re- 
ceived all  the  advantages  produced  by  large  corpora- 
tions in  lower  prices  of  everything  he  buys,  and  lower 
transportation,  the  price  of  what  he  sells  has  undergone 
very  little  fall ;  many  of  than  no  fall  at  all,  and  some 
have  even  risen. 

"What  is  the  influence  of  large  corporations  upon 
business  stability  and  prosperity?  This  is  one  of  the 
most  important  features  of  the  subject.  The  greatest 
menace  to  modern  society  is  business  depressions, 
which  usually  are  the  result  of  ignorant  eagerness 
among  competitors.  A  slight  boom  in  business  leads 
to  a  rash  increase  of  output.  Without  any  general 
knowledge  of  what  is  being  done  elsewhere,  each  hopes 
to  fill  the  new  void,  with  the  result  of  an  increase  of 
output  wholly  disproportionate  to  the  demand.  For 
instance,  the  Illinois  farmer,  when  the  price  of  corn  is 
high,  will  double  his  acreage  for  corn,  and  next  year 
finds  that  he  can  hardly  sell  the  corn  at  any  price,  and 
is  compelled  to  use  it  for  fuel.    Large  concerns  tend  to 


FROM   THE   PUBLIC   POINT  OF  VIEW  235 

remedy  this  evil  on  the  same  principle  that  they  invest 
heavily  in  experimentation.  They  take  pains  to  gather 
accm-ate  information  of  the  condition  of  their  business 
throughout  the  world.  They  find  it  pays  to  be  in- 
formed as  to  what  next  year's  demand  is  likely  to  be. 
Their  investments  are  so  large  that  they  could  not 
afford  seriously  to  miscalculate  the  demands  of  the 
market.  With  their  comparatively  accurate  informa- 
tion, they  adjust  their  production  with  great  precision 
to  the  present  and  probable  future  demand.  As  a 
matter  of  fact,  in  lines  of  industry  where  the  very 
largest  concerns  are  organized  there  is  the  least  per- 
turbation. If  the  raising  of  corn  were  in  the  hands  of 
a  few  well-informed  corporations  instead  of  thousands 
of  uninformed  small  farmers,  the  erratic  ups  and  downs 
in  corn-farming  would  be  largely  avoided.  Industrial 
depressions  can  never  be  eliminated  until  the  relation 
of  productive  enterprise  to  general  consumption  is  re- 
duced to  some  degree  of  precision,  which  the  small 
go-as-you-please  producers  can  never  do. 

Large  corporations  are  superior  to  small  concerns ; 
first,  because  by  the  use  of  large  capital  and  superior 
methods  they  improve  the  quality  and  reduce  the  price 
of  commodities  ;  second,  they  are  more  favorable  than 
smaller  concerns  to  high  wages,  and  individual  freedom 
of  laborers ;  third,  by  introducing  scientific  precision 
into  industry  they  tend  to  increase  the  permanence  of 
employment  and  reduce  the  tendency  to  industrial  de- 
pressions, all  of  which  are  vital  elements  in  the  nation's 
prosperity  and  progress. 

In  studjung  the  literature  against  large  corporations 
one  is  impressed  by  the  marked  absence  of  careful 
presentation  of  facts  and  rational  discussion   of  the 


236  TRUSTS  AND   THE   PUBLIC 

case.  There  seems  to  be  no  attempt  to  apply  economic 
principles  or  recognize  the  great  law  of  societary  evolu- 
tion. The  only  hint  thus  far  of  a  policy  to  be  adopted 
is  the  proposition  of  Mr,  Bryan,  which  is  that  congress 
pass  a  law  forbidding  all  corporations  to  do  business 
outside  the  state  in  which  they  are  incorporated  with- 
out a  license  from  the  federal  government.  It  is  dif- 
ficult to  imagine  a  gentleman,  who  is  about  to  be  for 
the  second  time  a  candidate  for  the  presidency  of  the 
United  States,  seriously  making  such  a  proposition. 
This  is  so  contrary  to  the  spirit  and  traditions  of  democ- 
racy, which  is  usually  opposed  to  any  trade  restrictions 
whatever,  and  so  contrary  to  the  American  idea  of  free 
intercourse  between  the  states,  and  so  contrary  to  Mr. 
Bryan's  previous  declarations,  that  one  has  difficulty 
in  taking  him  seriously.  If  this  is  really  the  best  that 
his  mind  can  suggest  on  the  subject,  it  is  a  depressing 
gauge  of  his  statesmanship.  It  Avould  hardly  be  pos- 
sible to  invent  a  proposition  that  would  be  more  fertile 
in  creating  corruption,  injustice,  favoritism  and  busi- 
ness demoralization.  A  license  might  be  granted  by 
one  administration  and  refused  by  another,  for  purely 
political  reasons,  which  would  be  equal  to  confiscating 
the  property  of  the  corporation,  since  it  would  destroy 
its  business  value.  There  is  not  a  single  aspect  of  this 
proposition  which  is  not  surcharged  with  economic  and 
political  iniquity.  It  partakes  neither  of  economic 
sense,  political  wisdom,  fair  statesmanship,  nor  even 
party  shrewdness. 

It  is  not  to  be  assumed,  however,  that  large  corpo- 
rations are  always  wise,  or  good,  or  fair.  They  are 
born  of  the  same  spirit  and  partake  of  the  same  attri- 
butes as  small  business  venders.     Their  main  ambition 


FROM   THE   PUBLIC   POINT  OF  VIEW  237 

is  to  make  profits.  It  is  tlie  duty  of  tlie  state,  tliere- 
fore,  to  see  to  it  that  the  conditions  shall  be  such  as  to 
make  dishonesty,  unfairness,  oppressive  dealing,  diffi- 
cult and  as  impossible  as  any  other  offenses  against 
the  welfare  of  the  community.  This  cannot  be  ac- 
complished, however,  by  the  petty  nagging  and  corrup- 
tion-creating, license-granting  scheme  proposed  by  Mr. 
Brj^an.  The  Federal  government  if  it  acts  at  all  should 
act  in  exactly  the  other  direction.  It  should  surround 
industrial  enterprise  with  the  maximum  freedom  and 
protection  to  all,  and  no  economic  privilege  to  any. 

To  this  end  it  might  be  well  for  congress  to  enact  a 
law  empowering  the  government  to  grant  national 
charters  to  corporations,  which  should  give  them  the 
right  to  do  business  over  the  entire  territory  of  the  and 
United  States,  and  against  which  no  state  should  have 
the  right  to  interfere.  This  would  be  economic,  in  that 
it  would  give  the  market  of  the  entire  country  to  every 
business  enterprise.  IsTational  charters  could  have 
the  proper  qualifications  subjecting  the  corporations 
to  a  certain  supervision  and  compelling  annual  reports 
to  be  made.  Second,  it  might  also  be  provided  that 
companies  using  a  public  franchise,  like  railroads,  should 
not  be  permitted  to  make  economic  discriminations  in 
their  rates  of  traffic,  that  they  should  be  subject  to  pub- 
lic accounting,  and  that  all  contracts  with  shippers 
should  be  accessible  to  all  other  shippers.  The  general 
influence  of  publicity  and  inspection  by  the  national 
government,  coupled  with  the  corporation's  protection 
in  its  right  to  do  business  throughout  the  United  States, 
would  tend  to  create  a  wholesome  influence  around 
corporate  conduct.  While  affording  corporations  the 
full  support  of  the  national  government  in  their  busi- 


238  TRUSTS  AND  THE   PUBLIC 

ness  rights,  it  would  free  them  from  the  petty  unecono- 
mic nagging  of  partisan  legislation  in  the  different 
states.  It  would  carry  out  the  true  idea  of  protection 
— that  the  American  market  should  be  open  to  every 
American  producer  and  that  the  interests  of  the  labor- 
ers and  the  public  be  safeguarded  by  the  national  gov- 
ernment ;  at  the  same  time  leaving  the  essential  feat, 
ures  of  business  to  be  determined  by  the  free  action  of 
economic  forces,  which  are  more  permanent,  more  sure 
and  more  equitable,  than  the  wisest  statutory  enact- 
ment ever  would  be. 


INDEX 


PAGE 

Abbott,  Rev.  Dr.  Lyman 46 

Allegany  oil  field 82 

Allentown,  N.  Y 83 

Antagonism  to  trusts 32,  35,  42,  44,  102,  189,  206,  214,  226 

Arkwright  Club,  Boston 131 

Australia,  strikes  in 126 

Blackmail  of  trusts 106,  114-116,  236 

Bolivar,  N.  Y 82 

Boston  Herald,  The 115 

Bradley-Martin  Ball 62 

Bryan,  W.  J 205-206,  236 

Business  depressions  ;  influence  of  trusts  on 234-235 

—panic  of  1892-93 213 

By-products  of  Standard  Oil  Co 12,    37 

Campbell,  Ex-Governor 102 

Capital  and  labor,  antagonism  of 99,  126 

Capital  of  corporations,  size  of 33,  216 

Capitalists,  drudgery  of 182-188 

Carnegie,  Andrew 180-181 

Carnegie  Company  ;  Homestead  strike 126,  181 

— similar  to  a  trust 210,  231 

Chamberlin,  CD  91 

Characteristics  of  trusts 2-4 

Charters,  national ;  for  trusts 237-238 

Chicago  conference  on  trusts 216,  226 

Civilization,  characteristics  of 67-68,  154 

Cleveland,  ex-president ;  last  message  of 221,  232 

239 


240  INDEX 

PAGE 

Competition ;  effect  of  trusts  on 6 

—effect  on  trusts 193-199 

—potential 34-25,  198-199 

Concentration  ;  necessity  of 35,  75,  100,  145,  223,  230 

— of  wealth  in  Rome 26 

Consumable  and  productive  wealth 5,     27 

Consumers,  rights  of .149-154 

Corporations,  trusts  changed  to 214,  229 

"  Corners"  and  speculative  combines.. 40-41,  75-76,  141,  192, 

203,  228-229 

Cotton  industry  ;  in  New  England  and  the  South 159-161 

— progress  of  since  1830 9 

— wages  and  employees  in 167-168 

Cottonseed  oil  prices 15 

Delegates,  walking 126-127 

Demand,  influence  of 153 

Democratic  features  of  trusts 89 

Depew,  Senator,  on  trusts 203 

Depressions,  business  ;  influence  of  trusts  on 234-335 

—panic  of  1893-93 213 

Displacement  of  labor 155-173,  190 

Economic  literature,  integrity  of 60,  213,  335-236 

Economic  service  of  trusts 35-36,  73,  78,  336 

Education,  public ■ . 137 

Employees  ;  number  in  cotton  industry 9,  167 

— number  in  petroleum  industry 220 

— number  in  64  industries 165-166 

Employment,  permanence  of 77,  232-233 

England,  government  telegraph  in. . . .   19-22 

Errors  of  trusts 29,  40-43,  79,  141-144,  192-194,  203-304 

Evolution  of  trusts 7,  33-34,  73-74,  190,  216-217,  226 

Experts,  industrial ;  necessity  of 201-203 

Factory  system,  rise  of 73,  157 

Farmers,  effect  of  trusts  on 234 

Federal  license  for  trusts 236 

Fortunes,  large 44,  180-188 

Freedom  of  employees 333-333 

Free  trade 45,  308 


INDEX  241 

PAGE 

Gas  companies,  competition  of 196 

Giffin,  Sir  Robert,  on  wages  of  cotton  operatives 148 

Gould,  Jay 3 

Government ;  duty  toward  labor 118,  119-139 

—duty  toward  trusts.  ..31,  78-79,  117,  204,  215-216,  237-238 
Government  telegraph  in  England 19-23 

Havemeyer,  H.  O.,  on  trusts 205-313 

Hobson's  "  Evolution  of  Modern  Capitalism  " 50 

Hoe  Press,  the  modern 163-164 

Homestead  strike 126,  181 

Hours  of  labor  ;  effect  of  shorter  hours 129-133 

— English  legislation  on 131 

— legislation  in  New  England 163 

Improvements  ;  in  street  railways 197,  312,  222-233,  231-233 

—in  oil  production 12,  37,  217-219 

Incentive,  necessity  of 146 

Independent  refiners  of  oil 107,  194-195 

Individuality  of  laborers 232-233 

Inferior  methods,  public's  loss  from 6,  215,  220 

Interstate  commerce  commission,  on  Rice  case 109-110 

Inventions,  use  of 11,  53-55,  161 

Labor  ;  displacement  of 155-173,  190 

—duty  of  state  towards 118,  119-139 

— duty  toward  new  machinery 172-173 

— freedom  and  individuality  of 232-233 

— is  not  capital 130,  146 

— organization  in  groups 123,  128 

— power  of  organized  resistance 199 

—protection  of 133-139 

—right  of  recognition 126,  128-129 

—strikes 68,  126,  181,  199 

— sub-division  of 120-121 

— walking  delegates 126-127 

Legislation  against  trusts 30,  42,  61,  224 

Legislation,  influence  of  trusts  on ..25-26,  200,  207-208 

License,  federal,  for  trusts 236 

Limits  of  trasts,  natural 24,  193-204 

16 


242  INDEX 

PAOB 

Lloyd,  Henry  D 45 

Long-and-short  haul 58,  112 

Luxuries,  economic  effect  of 65 

Machinery  ;  division  of  product 147-154 

—effect  on  labor  145-173 

— in  different  industries 38-39 

Meat  packing  concerns,  large  capital  in 223 

Michigan  law  against  trusts 224 

Monopolies,  are  trusts  monopolies  ? 4 

Morality  in  business 2,  29-30,  236-337 

Newspapers,  on  Havemeyer  testimony 206-209 

North,  S.  N.  D.,  on  hours  of  labor , 131 

Ohio  vs.  Standard  Oil  Company 105,  223-224 

Organization  ;  defects  of 122-123 

— necessity  of 228 

— representative  character  of  organizations 123-124 

Paper  trust,  competitors  of 195-196 

Parsimony,  economic  fallacy  of ...  65-68 

Permanence  of  employment 77,  232-233 

Petroleum  ;  American  exports  of 220 

— employees  in  American  oil  industry 220-221 

—prices  of 12-14,. 218 

— production  by  Standard  Oil  Co 13,  219 

— Russian  production  of 219-220 

— small  producers  of 83-88 

Philanthropy,  dangers  of 181 

Pingree,  Governor 224 

Pipe  lines 13,  217-219 

"  Political  Economy  of  Natural  Law  " 123 

Political  influence  of  trusts 25-26,  200,  207-208 

Populism 45 

Post-office  management  in  U.  S 22 

Prices  ;  effect  of  trusts  on 8,  24,  38,  73,  142,  193-199 

— general  movement  of 38,  73,  168 

— of  cottonseed  oil 15 

— of  cotton  cloth 10,  153 

— of  iron,  steel  and  wood 73 


INDEX  243 

PAGE 

Prices  ;  of  petroleum 12-14,  218 

— of  sugar 15 

—of  tin-plate .' 175-179 

Productive  aud  consumable  wealth 5-27 

Profits,  economic  necessity  of 146 

— hostilityto 45 

-of  trusts 12-13,  142 

Public  welfare  ;  effect  of  trusts  on 227 

— increase  of 74,   169 

Purchasing  power  of  wages 39^0,  169 

Railroads,  steam  ;  rates  on  tank  cars 107 

— long  and  short  haul 58,  112 

—rebates  to  trusts 48,  56-57,  108-109,  111-113 

— reductions  in  freight  charges 16,  221,  231 

Railroads,  street ;  future  consolidation  of 223 

—improvement  in 197,  212,  222-223,  231-232 

Rebates  by  railroads 48,  56-57,  108-109,  111-113 

Rice,  George  ;  case  of 46,  56-59,  105-116 

Richburg,  N.  Y 82 

Rise  of  wages  39,  77,  169 

Rome,  concentration  of  wealth  in 26 

Russian  oil  production, 219-220 

Selfish  motives  vs.  philanthropy 70 

Sherman  anti-trust  law 42,  104 

Single  tax  advocates 45 

Small  industries,  effect  of  trusts  on 82-88,  101,  199-200 

Socialism 45 

South  Improvement  Co 48,  110-111 

Standard  of  living,  effect  on  wages 63,  154 

Standard  Oil  Company  :  effect  on  small  producers.    82-88 

— employees  and  wages  paid 220 

— exports  of  oil 220 

— improvements  introduced  by .  , 12,  37,  217-219 

— manufacture  of  by-products 12,  37 

—Ohio  legislation  against 105,  223-224 

—prices  of  oil 12-14,  218 

— production  of  oil 13,  219 

— profits  of 12-13 


244  INDEX 

PAGE 

Standard  Oil  Company  ;  Rice  case 46,  56-59,  105-106 

— Russian  competition 219-221 

— South  Improvement  Company 48,  110-111 

— Van  Syckel,  the  inventor 53-55 

—"Widow's  cruse  " 51-53 

Street  railroads  ;  future  consolidation  of , . .  ^ 223 

—improvements  in 197,  212,  222-223,  231-232 

Strikes  ;  effectiveness  of 199 

— in  Australia 126 

— in  Connecticut 68 

—the  Homestead 126,  181 

Sub-division  of  labor 120-121 

Sugar,  prices  of 15 

Sugar  trust ;  rivals  of 195 

— unsavory  reputation  of 207 

Sweatshops 135-136 

Tank  cars  for  independent  refiners 107 

Tariff,  protective  ;  and  tin  plate  industry .143,  174-175 

— Havemeyer  on 205-212 

— Russian  duty  on  oil 219-220 

— when  to  remove 144 

Telegraph  service  ;  in  the  United  States,    16-18,  20 

— in  England 19 

Tin  plate  ;  prices  of  . .   175-179 

— production  of 174 

Tin  plate  trust 143-144,  174-179,  209-210 

Towns  ;  effect  of  trusts  on 90-98 

— future  of  small 97 

Trusts  ;  antagonism  to 32,  35,  42,  44,  102,  189,  206,  214 

— changed  to  large  corporations 214,  229 

— charges  against 4 

— craze  to  organize  in  1899 140 

— democratic  features  of 89 

— distinguishing  characteristics  of 2-4 

—duty  of  state  towards.  .31,  78-79,  117, 204, 215-216, 237-238 

— economic  duty  of 42-43,  142 

— economic  service  of 35-36,  72,  78,  236 

— effect  on  farmers ...  234 

—effect  on  prices .8,  12-14,  15,  38,  73,  175-179,  218 


INDEX  245 

PAGE 

Trusts,  effect  on  small  industries 101.  199-200 

— effect  on  small  towns 90-98 

-effect  on  wages 39,77,169,199 

-errors  of 29,  40-43,  79,  141-144,  192-194,  203-204 

-evolution  of 7,  33-34,  73-74,  190,  216-217,  226 

—natural  limits  of 24,  198-204 

-political  influence  of 25-26,  200,  207-208 

— power  over  prices 24,  142,  193-199 

-profits  of 12-13,142 

-the  tin-plate 143-144,  174-179,  209-810 

— why  first  developed  in  U.  S 74,  211 

United  States  ;  popular  attitude  toward  industry 213 

— why  trusts  were  first  developed  in 74,  211 

Van  Syckel  and  Standard  Oil  Co 53-55 

Wages  ;  cotton  operatives 10,  168 

-effect  of  trusts  on 39,  77,  169,  199 

—fixed  by  standard  of  living 63,  154 

— general  rise  of 39,  169 

— in  petroleum  industry •  •  •  220 

—in  64  industries 105-166 

— purchasing  power 39,  169 

— in  tin  plate  industry 177 

"Wealth  against  Commonwealth  "  (Lloyd) 45 

Wealth,  productive  and  consumable 5-27 

Western  Union  Telegraph  Co , 16-18,  20 

West  Virginia  oil  fields 86 

Wood,  Henry 123 

"  World  "  New  York 106 


V.     "^ 


l-<-/'l  hJ^yg  ^:jmm  %j 

^Tiuawsoi^     v/wuiNftittv*        >»Aavaani^      >&a8vi 


v^ 


^^^l•UBRARYa^ 


§  1   li-^  ^ 


^OFCAIIFO% 


>&AHvaan4^ 


%JI1V3J0^ 


^OFCAllfORjl^ 

>     v._,^ 


^    3 

^\W[UNIVER%       ^lOSA 


.^WEUNIVERy/A 

r  -' 


<^133NVS01'^ 


^lOSANCei% 


3 


^^iUBRARYQc, 


^.K0JI1V3J0'«^       '^^OJIT 


S 


.^WEl)N)VERJ/A 


S2  ra 


^lOSANCElfj-;> 


6 


;A,OFCAllFO%^      ^OFCAI 


'^<?A}JV««I1A'<'^       ^/9iHV> 


i-ANCElfx^ 

.,> 


^UIBRARYOc. 


4^1UBRARY(?/. 

§  1   ir^  ^ 


^^OJIIVDJO^      ^tfOdllVJJO^ 


\WEl)NIVERy/A 


<ril33NVS01^ 


:.f 


^OFCAUFORto 


^OFCAUFOff^ 


S      s 


^(JAavaan-^^ 


^(?AHvaaiii^ 


.5MEUNIVERy/A 

< 


<i^i3nw-«)i^ 


.tic  iitiit/rnr. 


iiv  iiirnp/. 


•c  iinninv/1. 


<riijoNvsoi=^ 


L  007  183  703  3 


§  1   ir^  ^ 


^lOSANCEier^ 


AA    001  147164    6 


^OAavHaii-^ 


^AOSANCEl% 


^    6 


^IUBRARYQ<^ 


- .       ^lllBRARYOr 


o 


%a3AINn3WV^         '^-JfOJITVDJO^ 


^iffOJIlVDJO'^ 


^lOSANCElfx> 
5  ''^^ »''^ 


^tjudnvw)!^      "^/va^Ainn  iwv 


.^OfCAllFOMfe.       ^0FCAIIF0% 


""^^^AavaaiH^    "^^Aavaan-i^ 


-s^lllBRARYftc. 
§  1   <r^  ^ 


^^lllBRARYdK 

«-3  i    «i— '  ^ 


'^.^ojnvjjo'^ 


AWEUNIVERS/a 

< 


<ri]J3NVS01^ 


^lOSAKCElfX;> 

IX. 

^ajAiNaauv^ 


<»,.OFCAllFO«i(^ 


>;,OFCAIIF0%, 


^^Aavaani^ 


^^^^EUNIVERSZ/t 


"^UDNVSOl^ 


^•lOSANCEl^^ 


'^/S83MN(1  lUV 


<tJMIUI\/CDrfv 


.  inr.ikirrir. 


tr  iinnin\/A. 


ic  iinn*n\/A 


